THE INFLUENCE OF HOUSE DEMAND ON VOLATILITY OF HOUSING PRICES IN NAKURU AND KIAMBU COUNTIES, KENYA

Abstract

The housing market in Nakuru and Kiambu counties has experienced fluctuations in property prices over recent years, creating uncertainty for homeowners, prospective buyers, and real estate investors therefore the study sought to assess the influence of house demand on volatility of housing prices in Nakuru and Kiambu counties. The study was anchored on perfect competitive theory. The study adopted a descriptive research design. The population of this study was 600 managers from 26 Kenya property developer association members who have developed properties in both Nakuru and Kiambu counties, Kenya. The study adopted a simple random sampling and Nassiuma’s formula to determine a sample size of 164 managers. The research data collected primary data using questionnaires. Piloting was done in Nairobi City County where 17 questionnaires were administered to managers of Kenya property developer association. The reliability was determined using Cronbach's alpha test whereby the alpha value of all the study variables were in the range of 0.7 to 0.9 implying that the instrument was reliable. Both descriptive and inferential statistics was adopted. Descriptive statistics was employed in the study using percentages, frequencies, measures of central tendencies and measures of dispersion. Inferential statistics comprised correlation and regression analysis. The study found that there has been a gradual increase in the demand of houses for the last five years. The study also found that the demand for houses depend on its proximity to basic infrastructure such as tarmac road. The study concluded that demand of house has significant influence on volatility of housing prices in Nakuru and Kiambu Counties. In addition, the study concluded that economic growth has a significant influence on volatility of housing prices in Nakuru and Kiambu counties.