Need to study this in detail...only 16,000 mortgage accounts...but at least the mortgage per account is a reasonable 8m per account which is at least not out of this world...

was present there when the report was availed.
Reporters!!!! What the standard guy does not mention is that Kenyas urban population will double in the coming years. The middle class will also grow as economies across Africa grow. The interest rates should also be reduced to manageable levels below 10%. in Sweden it is 4% for mortgage rates. The prices will also go as inflation picks up. Costs of land will obviously grow but to counter this Kenya should go the Rwanda way and tax unused land. Rental income will go down. My russian friend tells me Kenya is where most Easter Europeans countries were in Real Estate 20 years ago.

Developers will also narrow down to only a few competitors. Right now everyone wants a piece of the pie but not everyone will survive. Only a few developers will.

Hmmmm, I don't know.... I can buy a house for $34,000 in Las Vegas but not in Nairobi, no? That's about Kes2.7 m. That cannot even come close to getting me a house in Karen, where I have to supply my own water. Strange economics. Real estate in kenya is a massive gamble. I think prices are just rising because people 'know' they should. But bubble, not sooo fast.

i disagee..the world population is 7 billion now..in the year 2050 it will be 9 billion Of these around 2 billion will be african. Prices in the equator will rise as environments in the north and south of the equator get unstable..Making it harder to grow food there, higher population will mean more food to feed, less land to cultivate and high prices for food etc. Africa is the only virgin continent in the world. It should eventually move into the asian and South American way..its going to take a while before Real Estate crushes but if at all it will it will rebound. Land will be a more expensive commodoity than oil in the future and Sub Saharan Africa will reap alot.

This is shocking and very sad.

Only 16,000 people have a mortgage. I cant believe it.

A guy with a NET salary of 100k pm. has to pay 42k pm. I can believe it for short term
loans - but for 15 years . Madness.

I see a lot of houses sold every day in posh areas like Lavington, Westlands, Karen etc. These are going for 50 million plus. Who is buying these ? They dont need a mortgage and pay cash.

Where do they get their money from ?Your guess is as good as mine. Maybe these are guys doing fx trading or online marketibg !!!!

These high class houses are not coming down soon.

i disagree my guy apparently you did not do good study in environmental science, if the tempratures rice, they will be warmer winters and hot summers, this will mean at the equator, equitorial forests will turn to savannah and the savannah go semi-deserts, deserts will be more pronounced. the sahara will grow southwards. leading to longer droughts and fewer rainfall saesons. this will hit africa bad. if its any consolation. malaria will sprad to the tempraterate regions (the mid latitudes)and hotter sun will lead to the whites having cancer and may be hit hard. but in the end an ice age occurs and we are back to zero again.

JM said what alot of people never want to speak loud about, 40% of the costs of putting up a house is taken up by land.
I do believe that the real estate bubble is going to burst in the next 5 years, my reasons being:
1. With the advent of counties the concentration of people around Nairobi will start to go down. If you carefully study the real estate market, you'll realise that a house worth 10M in Nairobi may be worth way less in Eldoret or Kisumu.
2. Building material imports from China, new additional cement and steel factories.
3. With the new constitution and specifically the act to do with land, land speculators are in for a rough ride ahead. You can only hold land for speculation if you can afford it.
4. True we've got 16,000 accounts. Most of these guys are taking mortgages not to live in the houses but to rent them out though due to the high installment repayment amounts (i know of a guy who took up 10 houses on an apartment block), they tend to rent them at extremely high prices depending on the neighbourhoods. This has gone so bad to the extend that places where houses were going for 20k a month houses are now 40k. This in turn making investment savvy people realise that instead of paying a monthly rent of 40k for a house he won't own why not pay for one he will own. Though this creates demand, part of the 16,000 accounts that own alot of houses start to default, banks start to reposses these houses which they'll have to sell to recover their money thus creating an almost matching or over supply of houses and basically with the middle class being small prices go down.
5. Equity Bank, Family Bank, Jamii Bora and any other bank that has realised that this market has got alot of tax savings and a prospective consumer base worth billions and yet untapped.

The bubble will burst and when it does guys will remain with highly depreciated assets.

The bubble will burst... there is not doubt about that... The state of economy just needs to change a bit and you will see it coming... question is "when?" Show me any place in kenya where rent income can pay back the mortgage without the owner having to seat his pockets.... where you can recoup your capital investment in 10 years time through mortgage... unless you constructed it yourself (in cash)?. Doesnt make sense.... Infact, it is even cheaper to rent than to buy a house in nairobi.... why should i pay 60k per month for the next 15 years when i can pay 20k per month for the same house and invest the rest and come out better off than the person who owns the house?

The person who will be holding cash at the time, will have his world under this feet.... because he will be collecting at a throw away price.

I got in to the property development businees when things were still calm (around 7 years ago). From the way i understand the market a housing crash in the next five years is unlikely (though we may get a slight downward correction), the only situation i fear is a political crisis which can erode confidence. My reasons are as follows:

1) Kenyan banks are quite strict when it comes to lending
2) Quite a number of buyers are paying full cash for their homes (around 40% of my customers
have not taken loans)
3) The middle class i.e proffesionals are increasing rapidly.
4) The culture of buying rather then renting is increasing.
5) There is alot of money coming from abroad

However i must say things are reaching an equilibrium. There was a time i sold entire projects on the blue prints, nowadays it is difficult to acheive that but 90% are sold before completion. The correction i anticipate is around 15-20%, i feel this is necessary to weed out some of the developers who have no clue about what they are doing and overally this will be better for the market.

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