Different houses are priced the same despite the similarities there might be. Prices will vary over time. One house will be priced a certain amount one time and another a few months down the road. Prices also vary between places. A three-bedroom house will be priced differently in different towns within Kenya and even neighborhoods within the same city. Therefore, what is the reason for these differences? Why do house prices vary? Why are housing prices fleeting? Below are a few factors to which price variances are attributed.
1. Size
Square footage matters a whole lot. Look at how big the rooms are as well as the general expanse of the house. A four-bedroom house could be 2,000 square feet or it could be as big as 5,000 square feet. These two houses will definitely not be priced the same. Most of the houses in the city developments are smaller and therefore, depending on the side of town, will be less pricey than the alternative. For comparison, compare a four-bedroom house in Riverbank in South B to the same in Diamond Park along Likoni Road. The prices will be different and so will the size.
2. Location
This is actually one of the top reasons for varying house prices. To put this in perspective, you could divide locations into vacation destinations, metropolitans, and just regular towns. You could further divide these inot neighborhoods favored by members of different social classes. In a vacation town, many properties will be luxury and will, therefore, be expensive. In a metropolitan like Nairobi, the houses closest to the central business district will be more expensive than those afar from the bustle. For example, while Runda and Karen are both high-end neighborhoods. However, a five-bedroom house in Runda goes for 170 million shillings while the same goes for a full 50 million shillings less in Karen. Not only is Runda closer to the CBD, but it is also easy to access.
3. Extras
Every house has its basic qualities. It will have bedrooms, a kitchen, a living room among others. However, there are certain attributes that make that vary thus causing a deviation from the standard price. For example, a five-bedroom house with an infinity pool in the backyard will be way more expensive than one whose backyard is just bare grass. Imagine a well and creatively manicured lawn versus a bland cabro paved compound. The cabro pavement has lower maintenance costs in comparison to the other. The manicured lawn might cost a tiny bit more for obvious reasons. The point is, whatever you get above and beyond the standard will cost more. How much of the extras you have will determine how much higher the price is than the standard. Do not expect to get a Lamborgini with a house in Kenya, but there are some great offerings on the market.
4. Age
An old house will have quirks. It will be torn down in some places. It will need to be updated in other places. A buyer might need to change out some of the materials for environmentally friendly ones. There might be need to update the utility systems in the house. Point is that because an old house might require a lot of capital to get it current, it will be cheaper. A new house, however, will be slightly more expensive. This is because unlike the older house, this one is pretty much ‘plug and play’. You pay and move in without changing a thing. In some cases, you will find an old house that has been updated all the way with new appliances and eco-friendly materials. This will also be more expensive than the old house.
5. Target market
Who is being targeted for this property? What is their financial and social status? How much can they afford? What kind of payment plan can they work with? People in higher income brackets will want to buy properties with higher price tags because they are in neighborhoods that are more suited to their status. Therefore, the price will be set according to the kind of buyer the property owner hopes for. If they want a middle-class family, the price will be average. The house will also be pretty standard. Point is, a property owner will price their house according to the person they hope will buy it. This same maxim applies to the setting of rental prices.
6. Design
How complex is the design? Obviously more complex designs will add some weight to the price of the house. Here is an example, imagine an architectural marvel with a design that seems like it is defying engineering while also offering an eyeful of appeal. You cannot expect this kind of house to cost the same as a run of the mill one. This is despite both houses being the exact same size in square footage and number of rooms. If you want to live in a work of art, expect to pay money that is worth that work of art. Houses of this caliber tend to be rented out as opposed to selling. Renting allows more people to experience it as a piece of art.
7. Time
When is the house being listed? There are times when the economy just does not support buying or selling a house. There are times when the prices will be too high and therefore buying will be unattractive. There are also times when people prefer to buy houses due to different factors from fewer liabilities to government policies. During these times, the price might be high. The point is that the demand and supply rules of economics apply to real estate. These affect the pricing of houses thus causing fluctuations. The political situation of the country may also affect the pricing of houses. For example, after the post-election violence, there was a decrease in housing prices to encourage investment and as a means of rejuvenating the housing market.
8. Sellability
Some houses will be lacking in personality or perhaps have a little too much personality. The personality of the house will determine if the house will be likable or if it will be an acquired taste. This is what it means for a house to be sellable. Sellability will also determine how long the house stays on the market. If a house stays on the market too long, it will have to be priced down. The quick sale potential varies between houses. A high sell-potential means that there will be a lot of demand for it. As mentioned before, demand than supply drives the prices up.
9. Amenities in proximity
What is close to the property? Is the property close to the airport? Is there property too close to the highway? Is the property close to the railway station? Is there easy access to malls and shopping centers? Is it a family neighborhood with many good schools and kid-friendly amenities in proximity? This is why listings always include malls, schools and other elements that are within a short distance of the property. These are things that can determine how high the price of a house can go. These amenities are considered a benefit in real estate. They are considered worthy of a higher price.
10. Branding
Some real estate companies will brand themselves according to how their properties are priced. Some will pride themselves in providing housing for a lower class buyer. Different companies have different branding ideas and business models. This contributes to the differences in house prices in Nairobi.
11. Material cost
Often, there will be a situation that necessitates construction materials like timber among others to either increase in price or decrease. After all, they are commodities like any other. In the case of timber, it will usually be an increase as the government cracks down on illegal tree felling. Another material that tends to increase in price over time is stone. Stone is not a renewable resource. High material costs mean high construction costs which in turn means higher property prices at the respective times.
12. Neighborhood
Is the house located in a cul de sac? Is it a stand-alone property with its own perimeter wall and little to no houses close to that particular house? See, if it is a cluster of houses then the company will be selling a community. Often this will be more expensive than stand-alone houses. The ‘stand-alone’s are quite rare in the city though. Land scarcity does not allow for the luxury of lone living. Developers tend to go for clusters in the form of a community or estate.
Different houses are sold at different amounts. It is up to the buyer to decide if they are worth how much is being asked. Buy smart, go for value over prestige!
