The Relationship Between Inflation Rates and Real Estate Prices in Kenya. Case of Nairobi County
Abstract
Real estate industry has been one of the most resilient, vibrant and profitable in the world
today. The growth has mainly been driven by urbanization, a strong economy and stable
legal environment, significant credit expansion and increased spending on infrastructure
by the government. Fluctuation in property prices have been experienced in many
countries, this is attributed to the financial instability result from the house price boom
and bust. According to the Kenya National Bureau of statistics, in Kenya the real estate
has been a driver of growth in the past five years. Real estate markets are continuously
adjusting to equilibrium where price range is adjusted according to variation in supply
influenced by changes national and regional economies. Inflation has pushed up the cost
of doing business contributing to the cutting down to the number of properties.
This project objective is to investigate the relationship between property price and the
inflation rates. The causal research design was used in this study and secondary data
which was analyzed using SPSS package. From the findings it was observed that there is
no clear defined relationship between the property prices and inflation rates. From the
analysis of variance (ANOVA) statistic the study shows that the processed data has the
significant level. This indicates that the data is ideal for making conclusion and it also
shows that the data sampled represent the population. We can observe that the regression
sum of squares is very huge implying that much of the variability is actually accounted
for in this regression model.
The p-value=0.000<0.05 (significance level) indicating that the model is appropriate and
significant. It can also be observed that property prices has been on a continuous increase
over the years but gradually while inflation rate rose sharply to its peak (double digit
)highest of 19.72% in the last quarter of 2012. It has been fluctuating to extreme
variations. The findings of this study shows that there is no clear relationship between
the property price and the inflation rate.
Citation
Sylvia Kangogo C. (2013). The Relationship Between Inflation Rates And Real Estate Prices In Kenya. Case Of Nairobi County, Master Of Business AdministrationPublisher
University of Nairobi School of Business