House prices in Nairobi and its environs grew at the fastest pace since 2015, driven by rising demand for standalone units as land prices slowed after developers reduced the need for plots to build apartments following a glut.
A survey conducted by real estate firm HassConsult found that property costs rose 7.7 percent last year compared to 5.2 percent in 2024, marking the highest pace of expansion since 2015, when annual prices increased 9.6 percent.
Asking rental prices contracted by 2.5 percent, having been flat the previous year, offering respite to tenants who have seen a drop in their disposable incomes over the past five years.
Land prices in Nairobi’s satellite towns like Ruaka, Syokimau and Juja grew 6.21 percent per acre to an average of Sh32.9 million, down from 10.62 percent in 2024.
In the suburbs such as Muthaiga, Langata and Lavington, the price per acre grew by 5.92 percent to Sh226.8 million, which was slower than the growth of 6.8 percent seen in 2024.
Standalone houses were the key driver for both the property and land markets as demand for new units ran ahead of supply, buoyed by a bulging middle class and an upturn in economic activity.
Detached house prices thus grew at 9.5 percent, ahead of semi-detached units at 5.2 percent and apartments at 2.5 percent.
On average, the price of houses in Nairobi stood at Sh39.6million by the end of December, with a four- to six-bedroom property averaging Sh45.1 million and a one- to three-bedroom property at an average of Sh12.8 million.
“In the market for houses, Runda remained the strongest outperformer, with sales prices up by 12.8 percent across the year. Lavington, Muthaiga and Ridgeways also experienced strong house price growth, at over 10 percent for the year,” said Sakina Hassanali, co-CEO at HassConsult, which conducts the property pricing index in Kenya and largely sells homes in the high and middle segments of the market.
Kenya's private sector ended 2025 on a strong note, the Stanbic Bank Kenya Purchasing Managers' Index (PMI) showed.
The private sector economy maintained solid growth in December, driven by robust customer demand and increased business activity. The headline PMI stood at 53.7 in December, down from 55.0 in November, indicating a continued expansion in business conditions. Readings above 50.0 denote growth, while those below indicate contraction.
Kenyan firms reported a marked rise in activity, sales, and purchases, with employment growth hitting its highest rate since November 2019.
This growth benefited the middle class, who have spending power and are looking at real estate as an investment option and for home ownership.
In December 2025, detached houses accounted for 8.5 percent of the property market, compared to 20.4 percent for semi-detached units and 71.1 percent for apartments.
A decade ago, detached units accounted for 32.7 percent of the market, semi-detached units took up 21.9 percent while apartments accounted for 45.4 percent.
Rental prices were, however, contracting even as home buyers agreed to shell out more money to secure new standalone units.
The contraction of 2.5 percent in asking rents for the year was largely on account of apartment developers competing on prices in order to secure tenants in a competitive market characterised by a looming oversupply of units in suburbs near the city centre, such as Wetlands, Parklands and Upper Hill.
“In the apartments market, demand has never stopped expanding, but each area is now finely tuned in the volume of new development it can absorb at a time and very large developments often create a dip in rates as new entrants discount to gain full occupancy,” said Ms Hassanali.
In the land market, suburbs such as Spring Valley, Karen and Gigiri, which also primarily see detached house developments, led the city in land price growth at 10.4 percent, 10.2 percent and 7.8 percent to Sh307.3 million, Sh76 million and Sh262.4 million, respectively.
Land in areas that combine commercial or office developments with residential properties, however, remains the most expensive in the city, with an acre in Upper Hill costing Sh560.6 million and Westlands Sh502.7 million.
These two suburbs have seen significant development of infrastructure such as roads in recent years, helping them to emerge as key business districts and attract several corporates from the traditional Nairobi central business district.
Satellite towns, meanwhile, saw a marked slowdown in price growth, reflecting easing demand for new land holdings by both commercial and private home developers across the city.
“The three-year surge in satellite town land prices, which peaked in the third quarter of 2024 at 12.58 percent, slowed rapidly, returning to normal levels for the decade at 6.21 percent at the end of 2025,” said Ms Hassanali.
Demand for land in the outlying towns has largely been driven by middle-class buyers looking for affordable plots to put up their homes, and commercial developers putting up apartments and other facilities to serve the middle-class market.
These areas have a lower cost of land per acre compared to suburbs closer to the city, where the high price puts the property out of reach for middle-class home builders.
Prices in the towns are also influenced by the availability of amenities such as schools, malls and hospitals, which are a key factor when one considers the overall cost of settling in an area. Friendlier zoning laws also allow for the subdivision of land in the towns into smaller units of up to an eighth of an acre, putting land ownership within reach of more middle-class Kenyans.
In the towns, Juja and Kiserian reported the highest price growth in the year at 13.6 percent and 12.4 percent to Sh26.3 million and Sh13.5 million per acre, respectively, while Kiambu and Ruaka were the worst performers with a contraction of 1.5 percent to Sh48.8 million and a growth of 0.7 percent to Sh111.9 million, respectively.
