A decades-long property boom on the outskirts of Nairobi, including Kiambu, Kitengela and Ngong, is coming to an end as home prices drop and land costs soften.

HassConsult, a property agency which compiles a quarterly property index, says that house prices in the satellite towns have dropped in the past two quarters to June, while land cost grew 1.4 percent — the slowest in eight years.

This is a departure from a market structure that saw housing and property prices on the outskirts of Nairobi rise annually in double digits over a period of nearly two decades since 2002.

Housing had been one of Kenya’s fastest-growing sectors in the decade to 2019, with returns from real estate outpacing equities and government securities.

But equities, bonds and money market funds have risen to the top as developers struggle to sell units to a market that is balking at meeting the offer prices.

Eight out of 10 towns whose house prices have been tracked by the realtor over 18 years recorded a decline during the quarter ended June, led by Ongata Rongai, where the cost of homes dropped 2.7 percent to Sh15.6 million and 2.5 percent to Sh19.4 million in Ngong.

Ngong recorded the largest drop in land prices at 2.5 percent in the quarter under review, with Limuru, Athi River, Kiambu, Kitengela, Syokimau and Tigoni all reporting declines.

Read: Apartment prices decline for fourth consecutive quarter amid oversupply

“Despite resilient occupier demand, satellite towns continue to face greater price pressure than Nairobi’s suburbs, reflecting the sensitivity of their buyer base to rising household costs and tighter economic conditions,” said Sakina Hassanali, the HassConsult co-CEO and creative director.

The property craze saw coffee plantations in the capital’s suburbs uprooted to pave the way for gated housing estates and shopping centres, creating thousands of construction jobs.

But a soft economy, a leap in commercial interest rates and costly property prices have upended the market, wiping out developers’ and land dealers’ returns.

This has seen developers cutting back or postponing new construction as high-net worth investors put billions of shillings in the Nairobi bourse, government securities and money market funds.

The Nairobi Securities Exchange (NSE) has posted returns of 31 percent since the start of the year.

This reaffirmed the Nairobi bourse as the shortest route to wealth in an economy that has oscillated between strong and soft growth as investors increasingly turn to passive investments instead of pouring money into startups.

Kenya’s soft economy has left workers with a lower disposable income as employers have become hesitant to offer salary increases to cover inflation.

Inflation-adjusted earnings or real wages — a barometer for measuring employees’ purchasing power— grew by 2.0 percent last year, marking the first time since 2020 that growth in workers’ earnings has surpassed the increase in consumer prices.

Consequently, a regularly paid worker, or wage employee, saw his or her monthly real earnings increase marginally to Sh56,566 last year from Sh55,450 in 2024.

The earnings are, however, still lower than in 2020, when they stood at Sh62,256, meaning workers’ earnings have suffered an erosion of Sh5,690 compared to six years ago, excluding the effects of the new housing and health levies.

Infrastructure improvements, including new roads, provision of electricity to poor areas and improving security in crime-ridden areas from the early 2000s, drove land prices higher.

This raised expectations of even higher prices, fuelling the property boom.

Analysis of Nairobi land prices by HassConsult shows that in the year to March 2026, land prices in the satellite towns grew at an average of 4.3 percent, down from 9.93 percent in the year to March 2025.

Over five years, the average price per acre has gone up by 50 percent, from Sh22 million to Sh33 million, and has effectively doubled from Sh16 million per acre over 10 years.

This means that a person buying a quarter-acre piece of land to build a home is now being asked to pay Sh8.3 million on average in the areas surrounding the city, up from Sh5.5 million in 2021 and Sh4 million in 2016.

But the red-hot market is chilling.

Housing developers say the pace of building has cooled in recent years, after nearly two decades of rises that nearly tripled values.
Real estate analysts feel this underlying demand will prevent an all-out crash.

→ gngigi@ke.nationmedia.com

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