High real estate prices and the economic fundamentals
The case of affordable housing in Kenya is particularly acute and as decent housing remains inaccessible to the population, informal settlements and slums continue to grow as does the housing deficit. In light of this, the objectives of this research are : to find out the economic variables affecting the prices of residential houses in Nairobi and to find out whether these economic variables are the determinants of high residential housing prices. The research is an explanatory study that has been used to develop explanations as to why residential property prices are rising with regards to the economic fundamentals. The population used is real estate companies in Nairobi who have either sold, managed or constructed residential properties. A sample size of 30 real estate companies in Nairobi was selected and the survey was administered through use of questionnaires. It emerged that, in establishing the determinants of high of high residential property prices, factors such as the cost of land, availability of land and the construction cost have been identified as key factors influencing the high residential property prices. Economic variables such as interest rates and inflations are a positive influence on residential property prices. However, variables such as income, availability of construction materials and unemployment have been identified to be of no significant effect in determining the prices of residential property. The current housing prices emerged not to be justifiable in that they are overstated in the market. This is because, the economy is growing at a very slow pace if compared to the rising real estate prices. The research ends having identified some limitations as well as having given some few recommendations for further study.