Published On: Tue, Oct 14th, 2014

Kenya Bankers Association to launch a house price Index

Kenyan bankers will launch a house price index this year to help policymakers take a broader view of changes in the economy and to assist investors in managing risk, an official at the Kenya Bankers Association (KBA) said.

The index will initially cover just the capital Nairobi where property prices have risen rapidly in recent years, as demand outpaced supply and due to speculative activity in the market.

The country currently has no independent tool for tracking real estate prices. The only existing index, known as the Hass-Consult index, is sponsored by a real estate firm of the same name.

Jared Osoro, director of research and policy at KBA, said the index will launch before the end of the year and will be updated on a quarterly basis.

“It is really a policy tool for both market players and policymakers,” he told Reuters.

The central bank relies on the consumer price index, private sector credit data and other developments in the global economy to formulate policy.

It does not refer to housing prices due to the lack of a reliable housing price index.

Osoro said the new index will allow them to move away from “a very narrow consumer price index to looking at asset prices.”

The index will show changes in overall property prices and by category of residential property, such as whether it is a flat or a townhouse. It will also give a breakdown of prices by factors such as whether it is a house or a flat, has a balcony or a garden, or whether it is close to good amenities and access roads.

It will be calculated using data from valuation firms, insurance firms and mortgage financiers, Osoro said.

The index may later be expanded to include other cities, Osoro said.

Frank Ireri, chief executive of Housing Finance, the country’s biggest stand-alone mortgage financier, said the index will help investors in the sector and potential homeowners to make well-informed decisions.

“There is a need for better understanding of the market trends in both urban centres as well as across the counties,” Ireri said.


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