The Effect of Pricing on the Demand of High – End Houses in Nairobi Countythe Effect of Pricing on the Demand of High – End Houses in Nairobi County

Abstract

Owning a home is an important part of an individual’s life, not only because it provides shelter to an individual and his family but also it gives the individual a sense of accomplishment and pride for his labour. The housing sector in Kenya according to UN Habitat survey and Kenya Vision 2030 is faced with a demand of 150,000 housing units per year but only 35,000 housing units are delivered in the market annually. The shortage has caused developers to focus on issuing houses but only to the segment of the market with the highest return which is the high – end side, where prices continue to go up without regard to the demand. This research’s main goal was to determine the effect of pricing on the demand of high – end houses in Nairobi County. The research adopted a descriptive approach so as to be able to give a description of the state of the affairs as they exist. The target population was the 78 real estate firms registered and based in Nairobi, however, the researcher used random sampling to select the firms which were to be sampled for the research. The research found out that price, even for the high – end residential market, has a negative correlation with the demand, such that high prices tended to decrease the demand. The research also found that the improved economic situation of the country helped in increasing the demand for houses and also for the increasing house prices. Furthermore, the study also found that the improving interest rate regime in the country is also helping drive up the demand and also at the same time the prices of the houses in the high – end segment of the County. However, the research concluded that the continuous exponential rise in prices of the residential houses had contributed to reduction in marketability of the houses. The research therefore recommends government intervention through the enactment of policies, rules and regulations to guide on pricing of residential houses so as to maintain affordability to all. The government should pursue policies that improve the economic health of the country as this increases affordability of many individuals.