Nairobi Property Prices Rise 5.2% in 2024 on High Demand for Houses

In 2024, property prices in Nairobi and its surrounding areas experienced a 5.2% increase, doubling the 2.5% growth rate observed in 2023. This surge is primarily attributed to the rising demand for standalone houses, which have become less common compared to apartments.

A study by HassConsult revealed that Juja, Ridgeways, and Loresho led in house price appreciation, recording increases of 12.9%, 12.5%, and 11.6% respectively over the year ending in December. Detached houses saw a price rise of 7.5%, outpacing apartments and semi-detached houses, which grew by 1.6% and 0.8% respectively.

The limited availability of standalone houses has driven their price growth. In December 2024, detached houses made up only 7.2% of the property market, while semi-detached units and apartments accounted for 22.9% and 69.9% respectively. A decade earlier, detached units constituted 32.7% of the market.

Sakina Hassanali, Head of Development Consulting and Research at HassConsult, noted that the strong performance of detached units is due to their scarcity relative to other property types. Conversely, the increasing supply of multi-dwelling units like apartments has tempered their price growth.

By the end of December, the average property price in Nairobi was Sh36.7 million. Four to six-bedroom properties averaged Sh40.6 million, while one to three-bedroom properties were around Sh13 million.

On the rental front, prices for all property types in the city saw a slight decline of 0.02% in 2024, indicating landlords' challenges in raising rents amid economic hardships. This follows a 2.5% increase in rental prices the previous year.

The subdued rental returns have diminished the overall yield from property investments, making them less attractive compared to other asset classes like government securities and equities. In 2024, property yields, combining capital gains and rental income, stood at 7.2% in suburbs and 5% in satellite towns, whereas Treasury bill interest rates ranged between 9.5% and 11%.

The average rental price across 14 suburbs and 10 satellite towns surveyed by HassConsult was Sh167,704. Four to six-bedroom houses had an average asking rent of Sh237,107, while one to three-bedroom properties averaged Sh102,344.

This data underscores the shifting dynamics in Nairobi's property market, highlighting the growing demand and limited supply of standalone houses.