Kampala residential property prices drop
Rental and purchase prices for property in Greater Kampala Metropolitan Area decreased due to slowed economic activities. PHOTO/Edgar R Batte
What you need to know:
- Residential Property Price Index for the first quarter of the 2020/21 financial year and property prices in the real estate sector fell by an average of 10.5 per cent.
- As a result, Kampala and Makindye were the worst hit.
- Last month, Bank of Uganda warned that the relative price volatility in the real estate sector was undermining the quality of assets held by commercial banks.
The value and price of residential and rental properties in the Greater Kampala Metropolitan Area fell in the period ended September, according to Uganda Bureau of Statistics (Ubos).
The fall, Ubos said, was occasioned by slowed activity in the general performance of the economy due to Covid-19.
According to data released by Ubos under the Residential Property Price Index for the first quarter of the 2020/21 financial year, property prices in the real estate sector, especially rentals, fell by an average of 10.5 per cent with Kampala and Makindye being the worst hit.
The Index covers some areas of the Greater Kampala Metropolitan Area, among them Kampala Central, Wakiso, Makindye, Nakawa, Kawempe and Rubaga.
During the period, according to Ubos, property prices in Nakawa and Wakiso were the worst hit, falling by 26.4 per cent and 9.5 per cent, respectively.
Kawempe and Rubaga, registered the least decline of 1.6 per cent respectively, while Kampala Central and Makindye registered a drop of 6.5 per cent.
Fall in quality of assets
Last month, Bank of Uganda warned that the relative price volatility in the real estate sector was undermining the quality of assets held by commercial banks, noting the scenario presents a likelihood of an increase in non-performing loans in the foreseeable future.
The Central Bank noted that assets quality in the real estate sector had, for the first time since 2007/08, declined in real value, which presented “risks to credit performance arising from the real estate sector”.
In its performance of the economy report, the Central Bank indicated prices of residential properties across the country had fallen by an average of 2.9 per in the first half of 2020.
However, Ms Judy Rugasira, the Knight Frank managing director, told Daily Monitor the 2.9 per cent decline was a negligible figure to have a big impact on non-performing loans.
Daily Monitor could not readily ascertain how the new decline in the Greater Kampala Metropolitan Area is likely to affect the real estate sector.
House price indices, also called the Residential Property Price Index, measures the rental charge or purchase prices of residential properties such as flats, detached house and terraced house, among others.
Mr Sam Kasiromwe, the Ubos principal statistician prices, said the decline was mostly occasioned by Covid-19 given that prices had been steady or moving upwards before the pandemic struck.
For instance, he said, quarterly prices of residential properties in the same period in the 2019/20 financial year in Wakiso had increased to 9.5 per cernt from -1.0 per cent while those in Kampala Central and Makindye had risen to - 2.5 per cent from - 4.7 per cent.
