Since the credit crunch started lenders have pulled back credit lines. This means that among other things, first time-buyers can't find affordable mortgages at current house price. Neither can buy-to-let buyers. These two sectors have fuelled growth in house prices over the last decade. This means that sellers have to cut house prices. They in turn have lower deposits for their next homes, cue more price cuts until we get to negative equity. At negative equity,every mortgage borrower has to find additional capital to get a mortgage. Then? Both first-time buyers and those moving homes have to save more. Which means less spending.
This also has implications for Kenya Estate for Diaspora funds that find their way home into real estate. Real estate in Kenya has since 2002 been funded by 3 sources;
- Diaspora or NRKs (non-resident Kenyans)
- cheaper and accessible loans
- and savings in that order. And possiblly NGOs and foreign real estate funds (funded via savings and real estate equity)...
The only type of real estate that will continue appreciating will be plots...
1 comment:
Hi MainaT,
Nice posting, thanks for sharing...
Real Estate industry is becoming a hot place for many people...
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