CORPORATE INTELLIGENCE AFRICA ISSUE 0024

quarter,” stated the report in part. The mortgage firm has invested Ksh699.72 million in properties during the half-year perio . The firm increased its portfolio of borrowed funds by Ksh3.3 billion to Ksh12.02 billion up from Ksh8.71 billion. According to the second quarter results of the house price indices and mortgage report 2013 released this month by Hass Consult, the second quarter was described to be a period where the housing market continued to be fueled by cash purchasers. It states that the distortion of the Kenya’s housing market caused by a ten point spread that sees many Kenyan banks offer mortgages at 18 to 19 per cent, where the Central Bank of Kenya rate is running at 8.5 per cent, continues to progress. It further reveals that only significant house price rises came in the stand alone house segment, where particularly desirable properties were chased by multiple buyers, leading to some sharp price rises. The report indicates that people who would now like to buy a town house are very often finding the mortgage payments prohibitive, so are instead renting the same kinds of houses. However, at the same time buying town houses to rent is presenting landlords with the same equation of higher finance charges than rental yields and sales price appreciation. “Sales, nonetheless, remain steady in the segment, driven by cash buyers. But the bottleneck caused by expensive finance is seeing more people chase town houses for rent than are available, leading to a 5.1 per cent climb in town house asking rents in the second However, the rise in house prices and previously sharp rises in rentals combined with cuts in lending rates have now brought some parts of the real estate market back into equilibrium, where rental yields and price gains together equal the cost of finance. Nonetheless, the high cost of finance continues to be the dead hand on the sector, with the actual profiteering concentrated among Kenyan banks. In the sec- ond quarter, the foreign banks led the way in further cuts, with CFC Stanbic moving to pole position as the lowest cost lender with a 3.5 point cut in its mortgage rate from 17 per cent to 13.5 per cent. Residential flats THE CORPORATE INTELLIGENCE AFRICA FOR AUTHORITATIVE AND EXTENSIVE BUSINESS INSIGHTS www.corporateintelligenceafrica.net 15

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