Not many families rely on mortgages. For single dwelling units, I think the growth will continue since a lot of those constructions rely on SACCO loans which do not charge high interest on their loans. Some sectors of the real estate industry e.g., those costing over 8 millions per unit will slow down significantly. But with a growing population - its going to take a long time to slow growth of dwelling units costing less than 8 million. ha ha don't ask why 8 million - just an eyeball figure

If people can not afford how will this property prices go up? Between 2001-2010 property prices have more than tripled...has the GDP done the same? this IMF austerity will slow down property prices...i expect a sharp correction on that front especially the high end of the property market...also the Somali factor is worth considering in the property boom of 2001-2010 but a bubble?...NO.

Knife and fork in hand; foreclosures anyone?

To be honest, the writting is on the wall - there will be a correction shortly. The supply of apartments and vacancies has increased.

Wanted to check something with you guys. I have been shown a few units in Nyayo Embakasi, the new phase. This place has thousands on units! Question is: Is this a worthy investment? Prices range about 5M- 5.5M and rents of approx 25-27k. My first concern is the supply - these are thousands of units!! Is capital appreciation a pie in the sky here?

V common misconception re mortgages..According to CBK's june monthly as at end of June, bank loans for real estate, construction and building were Ksh112bn i.e. just over 10% of all loans. If you add in a portion of Ksh118bn to private households, its even higher...

ForSport - Thanks! it's true, i still havent made up my mind on this one...still dithering! What's the price of the current lot? Do you know if it's been sold out already?

stanchart has an offes for Nyayo embakasi. Variable rate @ 11.9 and fixed rate for 1st 5 yrs @ 13.5, Term 20 yrs max. If salaried, i can assist on contacts.

Is the demand more than supply? If demand is measured by purchasing power, not just the need for homes, the supply and demand figures are fairly balanced. Note most of purchases for homes, land and vehicles are financed by loans from the banks, and as such, the rise in interest rates will discourage borrowing, or at least the amount the bank is willing to lend. This is because the higher instalments will reduce what one can qualify for while increasing the risk of default for those who have existing loans. The ability to buy will reduce, and consequently reduce real demand on real estate. In the short term at the current interest rates, i expect the prices to stabalize or slightly stagnate. It is for the same reasons that the demand for personal cars will continue to go down as it has always been fuelled by personal loans. Despite the depreciation of the shilling, and contrary to expectations, it will be a buyers market for these cars as result of erosion of disposable income and drying up of personal loans.