UGANDA, Kampala | Real Muloodi News | Rent rates and property prices, especially in Kampala, declined for the period ending September 30, According to UBOS,
The fall in residential property rates is attributed to a drop in income that resulted from the negative impact of Covid-19. Reduced disposable income results in reduced actual demand, which has resulted in supply superseding demand, which then forces prices in a downward trend in the Greater Kampala Metropolitan Area (GKMA) in the first quarter of the 2021/22 financial year.
Mr Edgar Niymbiay, the UBOs principal statistician, price statistics, said they had noticed a drop in residential property rates, both on the sale and rent sides.
“During the period, the largest drop was witnessed in Kampala, spreading into some selected parts of Wakiso District,” he added while releasing the Property Price Index in Kampala.
Mr Niymbiay further said that the property dealers have no buyers, and as a result have opted to sell at lower prices.
According to UBOS’ Residential Property Price Index (RPPI), First Quarter 2021/2022, Press Release; Year on Year quarterly RPPI for Q1 2021/2022 decreased to minus 10.7 per cent compared to 8.2 per cent increase recorded in 2020/2021 Q4. The decrease recorded for all GKMA residential properties is attributed to Residential Property Inflation in Wakiso area that decreased to minus 14.7 per cent for the year ending Q1 2021/2022 compared to a 2.1 per cent increase registered for the year ended Q4 2020/2021.
In addition, Residential Property Inflation in ‘Kawempe & Rubaga’ decreased to minus 17.0 per cent while that of Nakawa decreased to minus 13.7 per cent for the year ending Q1 2021/2022. This can be compared to increases of 10.4 per cent and 5.9 per cent respectively registered for the year ended Q4 2020/2021.
However, Residential Property Inflation in Kampala central & Makindye areas increased to 0.1 per cent for the year ending Q1 2021/2022 compared to 14.4 per cent increase registered for the year ended Q4 2020/2021.
The Quarterly Inflation for Residential Property for GKMA registered a 12.6% drop for Q1 2021/2022 from the 5.6% rise registered for Q4 2020/2021.
This quarterly change was mainly due to Wakiso Residential Property Inflation that registered an 8.5 percent drop for Q1 2021/2022 from an 8.8 percent rise recorded for Q4 2020/2021.
The report further establishes that the quarterly prices of ‘Kawempe & Rubaga’, “Kampala central & Makindye’ and Nakawa registered 18.7 percent drop, 14.7 percent drop, and 7.9 percent drop for Q1 2021/2022 from the 5.5 percent rise, 1.4 percent rise, and 9.7 percent rise respectively registered for Q4 2020/2021.
This general price decline (deflation) has resulted in a reduction in associated products and services, especially concerning credit extension and demand.
The Ministry of Finance, in its Performance of the Economy report for the period ending in August, said credit extension to construction had declined by over 50 per cent between June and July because of growth in risk associated with the real estate sector.
This has negatively affected the real estate sector as the players are now finding it hard to access credit, as banks while lending to sectors that they consider high risk in terms of repayment.
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