News Column

Don't Expect a Housing Bubble Burst Soon

July 10, 2014

Kennedy Kangethe

The real estate bubble is not about to experience a burst anytime soon, according to an financial expert.

Ken Kaniu, the Chief Investment Officer at Stanlib said even though demand for housing in the country is still above supply, property prices should begin to stabilise in the next decade.

"One of the key ingredients of a bubble is the presence of properties being sold via debt and very low interest rates, as people borrow over and above their capability, Kenya has the opposite."

"We have seen property prices escalate in Kenya three times since the year 2000 very rapidly; that kind of growth is not sustainable! We will not see another 300 percent growth in the next 10 years - we will also not see a collapse - what we are seeing now is that people are becoming more sophisticated, raising questions about the properties they are buying and therefore you will see prices beginning to hold," he said.

Kaniu said interest rates in the country are still high with credit as a factor in purchasing a property below 10 percent.

"In Kenya prices they are actually going up leading to people developing their own property rather than buying one in the open market," he stated.

He also observed that developers were now targeting counties as demand for commercial properties increase.

"Counties need malls for shopping, they need proper three star and four star hotels for meetings, offices and there are more opportunities, which has led to property rising in counties," he said.

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Source: AllAfrica

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