Asking prices for houses are set for further hikes this year as cash buyers take hold of the homes market, real estate firm HassConsult has said.
In its first quarter property index, the firm said high financing costs for developers mean fewer new home construction, and buyers will be competing for a smaller stock of houses.
"With cash buyers continuing to drive the market, some further asking price rises are likely in 2014, based on the reduced flow of new building - caused by the high levels of finance costs for developers," said Sakina Hassanali, the head of research and marketing.
The top-end segment was the main driver of activity in the property market in the first three months of the year, as it is dominated by cash buyers. The middle-income and lower-income segments rely on financed homebuyers, who are finding it had to qualify for mortgages.
Asking prices for detached and semi-detached houses, which cost about Sh35.3 million and Sh19.7 million respectively, rose by 1.8 per cent in the first quarter.
"The most intense activity - in enquiries, viewings and in sales - was at the top end of the market. In the middle and lower market, sales continued, but at much the same, somewhat subdued pace of 2013," said Hassanali.
Asking prices for detached houses were up by 1.1 per cent over the year to March, while semi-detached houses rose fastest by 3.5 per cent in the 12 months to March.
All property prices increased by 1.9 per cent in the quarter and are up 1.7 per cent in the year. The average property's value has increased from Sh7.1 million 14 years ago to Sh24.6 million in March, according to HassConsult.
Rents for detached and semi-detached houses also increased fastest in the quarter at 2.3 per cent and 2.7 per cent. The average rent for a detached house is about Sh189,332, while that of a semi-detached unit is Sh130,142, according to the property index.