Nairobi’s housing market has experienced a significant rise in prices over the past year.

With property values climbing rapidly despite the economic challenges posed by high interest rates.

According to a recent quarterly report from real estate firm Knight Frank, Nairobi’s property prices surged by 6.6% over the last 12 months.

Making it the city with the sixth-fastest growing housing market globally.

This impressive growth places Nairobi as the leading African city in the rankings, a substantial leap from its previous 19th position.

The report highlights that, on a global scale, house prices increased by 2.6% in the 12 months leading up to June 2024.

This is a noticeable slowdown compared to the 4.2% growth recorded in the previous quarter.

Reflecting the diminished spending power across 44 cities worldwide, largely due to rising interest rates.

While housing markets experienced a sharp downturn in late 2022, a gradual recovery began in mid-2023 as central banks in various countries started to lower interest rates.

This easing of financial pressures helped spur the recovery in property markets, leading to the current uptrend in prices.

In the global rankings, Manila in the Philippines took the top spot with an impressive 26% annual rise in property prices.

It was followed by Mumbai and Delhi in India, with increases of 13% and 10.6%, respectively. Los Angeles and Miami in the United States also saw significant growth, with price hikes of 8.9% and 7.1%.

Knight Frank’s Global Head of Research, Liam Bailey, noted that the slowing global price growth could potentially rebound if central banks continue to cut interest rates.

“The recent slowdown in price growth across global prime markets reflects the fact that, without further stimulus from rate cuts.

The market’s pricing momentum may be losing steam,” Bailey explained in the report.

He emphasized that the future trajectory of house prices largely depends on the decisions of central banks and their willingness to reduce rates further in the coming year.

The Central Bank of Kenya (CBK) cut its base rate from 13% to 12.75% on August 6, 2024.

This reduction is expected to lower borrowing costs for prospective homeowners.

CBK Governor Kamau Thugge defended the previous higher rates, stating they were necessary to stabilize the Kenyan shilling and reduce inflation.

Indeed, data from the Kenya National Bureau of Statistics (KNBS) showed a drop in the inflation rate from 8.1% in October 2023 to 4.3% in July 2024.

“The MPC noted that its previous measures have successfully reduced overall inflation to below the target range midpoint, stabilized the exchange rate, and anchored inflation expectations,” Governor Thugge remarked.

As Nairobi’s housing market continues to grow, the city’s position on the global stage underscores its resilience and the dynamic nature of its real estate sector.