Homeownership remains low with the majority of Kenyans despite house prices dropping as the real estate market continues to correct.
The House Price Index by property firm HassConsult shows house prices in satellite towns declined by 50 basis points last year, the first-ever drop since the survey commenced in 2008.
This, as a result of the challenging economic environment, witnessed last year, characterised by massive job losses and company shutdowns.
HassConsult head of development consulting Sakina Hassanali said developers, who are looking to make a killing in the lucrative real estate market, are currently dictating property and house prices.
Unfortunately, the Kenyan real estate market is a majority investment tool. The current market prices are what investors quote to make the most profit.
She added that this was the reason why most Kenyans are becoming landlords or property owners before they themselves become homeowners.
Real estate is not being built for people who want to own a home, but rather for people who want to make investments.
Hassanali said the only way more individuals would achieve homeownership is through the creation of cheap financing tools and the establishment of more lucrative investment channels to divert investors from real estate.
If other business investments become lucrative then the price of real estate will correct to fair value.
The report also shows increased market correction in the rental department, landlords resorting to reducing rents to retain existing tenants and attract new ones in an oversupplied market.
The report shows rent in satellite towns dropped by 2.1 per cent last year, an indication that landlords reduced their demands in response to the tough economic times and increased market supply.
A notice sent out by Bekam Properties on Wednesday stating the landlord had decided to slash rental prices evidences this, with this instance not being the first such being witnessed across Nairobi.
As a result of the price correction, Juja recorded the highest drop of 9.6 per cent over the year.
The property index shows rents in Nairobi suburbs have also taken a downward turn, dropping 2.3 per cent last year.
Parklands reported the largest drop in rental prices of 5.2 per cent over the year.
Furthermore, landlords are becoming less demanding especially in areas where there is an oversupply of similar units.