Abstract:
Real estate is a basic need and forms the significant component of human wealth. Therefore, a change in real estate prices has a significant impact on individuals’ welfare and investment decisions. In Kenya, and particularly Nairobi and its environs, real estate prices continuously increased since 2004. This has raised concerns and fears that the sector may become unsustainable and cause financial crisis in the economy. This study focused on the determinants of the prices of residential houses in Nairobi City County, Kenya. Quarterly data for the period 2004 Q1-2017Q2 sourced from private real estate firm (Hass consult), mortgage lending institutions, the Central Bank of Kenya, and the Kenya National Bureau of statistics was analysed. The study used correlation analysis to determine relationships that exist between the prices and selected independent variables. The residential real estate price increase can be explained by non-macroeconomic fundamental changes in the country, among them building and construction costs, and population growth and house trading volumes(sales). The study was highly constrained of enough data. The study lays the ground for further research into the rampant increase of real estate prices in the Kenyan urban market
