The Relationship Between Selected Macroeconomic Variables and the Performance of Real Estate Properties in Nairobi County
Real estate is basically property consisting of land and the buildings or various improvements that have been done on such a property. Real estate properties are the improvements done on land through the construction of buildings on the land. The study sought to find out to establish the relationship between selected macroeconomic variables on the performance of real estate properties in Nairobi County. The study investigated factors such as interest rate, inflation rate, unemployment rate and real GDP. The study adopted descriptive research design. The study targeted real estate property prices, inflation rates, unemployment rates and real GDP data for a period of 5 years (2009-2013) in Nairobi County. Data was collected from the Kenya National Bureau of Statistics for all the variables for the period of 5 years. The study found that there was a positive correlation between real estate property prices, interest rate and inflation rate. It found that the interest rate can increase real estate property prices, hence improving its performance. An increase in interest rate results to an increase in real estate performance and vice versa. The study also found that inflation rate leads to increase of property prices, which contributes a better performance of real estate properties. This means that an increase in inflation rate results in an increase in real estate performance and vice versa. However, the study found a negative correlation between real estate property prices, real GDP and unemployment rate. A decrease in real GDP results to a decrease in real estate performance and vice versa. The unemployment rate is affecting real estate property prices negatively lowering performance of real estate properties. The study recommends further studies should be done in various other counties so as to determine which factors are considered in the determination of real estate property prices.
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