Covid-19 Impact: Residential Property Prices Dropped in Kampala, Wakiso Between April and June – UBOS


This house was up for rent in Munyonyo in 2019. Photo: Knight Frank
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According to the Uganda Bureau of Statistics (UBOS), prices of Residential houses in Kampala and Wakiso fell between April and June 2020, a good time to buy at a bargain.

The statistics body says that prices dropped by 3 per cent in the greater Kampala, that is in areas of Wakiso, Kampala and Makindye, Rubaga and Kawempe.  Only Nakawa saw an increase in house prices. This is contained in the Residential Property Price Index (RPPI), which observed prices of houses in April, May and June 2020.

The fall in prices from April is a change of what transpired in the previous months where prices were going up. This is indicator that covid-19 had a direct impact on the cost of a house near you.

Ibrahim Mugera, a real estate dealer, said it is a buyers’ market currently and anyone can get themselves a property at a bargain. He said incomes are dismal and Ugandans with money are not spending it.

“Ugandans don’t have money, those with money do not spend it, yet expatriates who usually rent the properties went back home, making the industry unattractive,” he said.

The months of April, May and partly June 2020 is when Uganda was under strict lockdown in a bid to stem the spread of coronavirus. This affected demand for house sales as would-be buyers held onto their money.

According to UBOS, Kawempe and Rubaga had the biggest drop in prices by 13 per cent in the quarter between April and June 2020.  The prices in this area had previously had a 9 per cent increase in the third quarter (January – March) of 2018/19 financial year.

Makindye and Kampala, with high end properties, saw prices drop by five per cent between April and June 2020, according to UBOS. This pales in comparison with the huge rise in prices in the previous months.

These findings rhyme with findings by the estate agent Knight Frank which reported that in the first six months of 2020, the country saw an increase in the number of residential apartments while occupancy of the same had a 10 per cent drop, the biggest in recent times.

Mugera said that there are widespread defaults on rent in the market and investors are not willing at the moment to sink money into the property where no one is willing to rent. In June, Bank of Uganda said it expected the value of their assets in the real estate industry, including land and houses, to decline as a result of the covid disruption.

As a result, a limitation on how much banks can lend to those buying real estate emerged, further crippling people’s ability to go for these properties. BOU directed from June 1, 2020, a maximum limit of 85 per cent on the loan value ratio (LVT) for the residential mortgages and loans for land purchase, wherein value means appraised market valuation.

This meant that banks can only offer 85 per cent value of the property as a loan and the buyer has to pay the remaining 15 per cent from their pockets. There are banks that have been offering up to 100 per cent value of the property as a loan. This is no longer the case.

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