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House Price Crash Forum

Kimunya Warns Of A Housing Bubble Bust (kenya)

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An asset bubble, an economic feature that occurred in Japan in 1980’s and Sweden and Finland in the 90s, happens when too much money is chasing too few assets, causing both good assets and bad assets to appreciate excessively beyond their fundamentals to an unsustainable level.

When prices reach a peak value and buyers can no longer afford to secure additional funds to afford them, prices begin to fall and individuals owning property find themselves stuck with assets they cannot sell as market prices are lower that the prices they bought them at.

According to Prof Olima, the current situation has been brought about the prevailing low interest rates and the banks excess liquidity, leading to increased lending.

In such situations investors tend to avoid putting their capital into savings accounts. Instead they leverage it by borrowing from banks and investing the capital in financial assets such as stocks and real estate.

“Not only can the aftermath of such a crash devastate the economy of a nation, but its effects can also reverberate beyond its borders.” Such warnings have also been issued in UK and US.

Is it really that simple ?

The world turned into a giant casino!

Edited by Ash4781

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Is it really that simple ?

The world turned into a giant casino!

.......all this mortgage lending has taken place in Nairobi mainly since 2002......like all bubbles it would appear all the lenders seem to have jumped on the wagon....I like:

“The prices some property developers are tagging on houses cannot be justified by costs they incur during construction,” said Mr Shitanda.

Property developers on their part have maintained that the price disparity being witnessed has been occasioned by differences in types of construction materials used in buildings and high quality finishes


The developers will take as much as people are willing to pay.......don't tell me Nairobi has forgotten how to haggle for a bargain.......and of course the real fly in the ointment must be the lenders willing to lend against whose valuation.....?.....not sure how it works there....

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