Importance of Property Market to the Kenyan Economy
Property market has a direct effect to the economy, the buying and leasing of property is one way it contributes, the construction is another job creation platform.
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When one builds a house, this leads to a total output (GDP) contribution, through various investments such as building materials investments, creating local jobs, and also a land investment. The local citizens who get more profits when homes are built for more residence will start buying the local services and using local shops. This makes the property market an unpredictable part of how the total output of the economy is measured but here are some of the ways it has affected the Kenyan economy.
Money borrowing.
The property market tends to have fluctuations just like any business in Kenya, though for property money all fluctuations affect the economy directly. When more people have the ability to borrow money to buy houses, the economy will definitely rise. With this more banks and building societies stretch to provide the loans. The lower the interest rates, the more people are able to buy a house. This also leads to an increase in house prices and an increase in the economy.
Population increase.
An increase in population size automatically increases the demand for houses, this is a great boost to the economy. When the Kenyan population increase more single persons households demand will rise and as this demand rises the house price also rises. This definitely means a growing house demand is a growing house price and is a growing economy.
Low house supply.
Generally, house prices tend to go higher when the supply of houses is low. Negative as it may seem low house supply is always a boost to the Kenyan economy. From overpricing of the existing homes to the full mortgage compensation, no homeowner can stand a chance of running a loss as compared to the total money invested. People also tend to compete by going an extra amount for their willingness to spend to get a house.
Housing market bubble.
There are also times when the prices of the property market rise because people just think that they are bound to rise. Now, this causes stability in the economy for a while know as a market bubble. Despite the belief that a market bubble is always followed by a great crash in the economy a market, the bubble is always the property market at its peak and it is also the economy at its peak.
