Bank lending for cars, appliances, electronics, furniture and other consumer durables has overtaken property financing, marking a shift in borrowing patterns as lenders become more cautious on real estate.
Credit for consumer durables has crossed Sh500 billion, latest banking industry data shows, reaching Sh502.2 billion in June 2026, which is Sh44.7 billion or 9.8 percent more than a year earlier.
The stock of bank loans for motor vehicles, household appliances, furniture, electronics and computing equipment, alongside other assets designed to last for several years, was Sh56.3 billion higher than real estate credit.
This was after lending to real estate fell by Sh6.1 billion to Sh445.9 billion during the same period.
Much of the lending under consumer durables is structured through asset-financing arrangements, while unsecured and check-off loans also support purchases of household goods and technology.
Borrowers include salaried workers, middle-income and wealthier households, as well as micro and small businesses using financing to acquire vehicles and major equipment.
The shift means banks are now carrying a larger pool of credit against movable household and business assets than against credit through mortgages, property development loans and financing for commercial buildings for the first time.
The crossover marks a dramatic reversal from June 2018, when banks had Sh373.7 billion in real estate loans against only Sh181.4 billion for consumer durables.
Consumer-durable credit has since climbed 176.9 percent, while real estate lending has grown by only 19.3 percent, pointing to a fundamental change in borrowing patterns.
The latest figures also show banks becoming more cautious about property, with a growing share of lenders expecting deterioration in real estate loan quality.
The Central Bank’s quarterly Credit Officer Survey found that 27 percent of lenders expected real estate non-performing loans to increase in June, up from 14 percent in March.
Only 27 percent expected bad property loans to decline, down from 32 percent three months earlier, while 46 percent expected them to remain unchanged.
The caution is also evident in lenders’ recovery plans, with 70 percent expecting to intensify loan recovery efforts by September, up from 68 percent in the previous quarter.
This suggests that while property lending has not collapsed, banks are paying closer attention to repayment risks as they assess new and existing exposure to the sector.
Actual bad loans, however, have been falling. CBK data show real estate NPLs stood at Sh109.8 billion of a Sh503 billion gross loan book last December.
That was down from Sh130.7 billion in NPLs out of Sh512.2 billion three months earlier, showing that current loan performance does not point to a broad-based deterioration.
The divergence between falling NPLs and rising lender concerns points to a more cautious outlook rather than an immediate property-loan crisis.
Real estate credit has already entered contraction after years of slowing growth, falling 1.35 percent in the year to June 2026.
Annual growth had slowed from 32.4 percent in June 2022 to 3.67 percent in 2023, 3.61 percent in 2024 and 1.64 percent in 2025.
The latest decline is the first annual contraction since June 2021, when real estate credit fell 21 percent during the disruption caused by the Covid-19 pandemic.
The weakness also masks significant differences within the property market, with stronger demand for high-quality buildings contrasting sharply with pressure on older commercial stock.
Knight Frank’s Africa Office Market Review for the first half of 2026 describes a two-tier market, with an undersupply of Grade A offices alongside an oversupply of lower-grade buildings.
The stronger segment has benefited from rising occupancy and rental resilience, while older offices face elevated vacancies and greater competition for tenants.
Average Grade A office rents in Nairobi stood at about $13 or Sh1,684 per square metre in June, unchanged since June 2022, according to Knight Frank.
Occupancy has nevertheless improved steadily to 84.8 percent, from a post-pandemic low of 71.5 percent three years earlier, while rental yields have remained at 8.5 percent since June 2023.
The figures suggest that the cautionary stance by the banks is not necessarily a verdict on the entire property market, but reflects differences in the quality and performance of assets and borrowers.
Consumer-durable financing, on the other hand, has been moving in the opposite direction, recording nearly 10 percent annual growth for a second consecutive year.
Credit increased by Sh44.7 billion in the year to June, following a Sh40.2 billion increase in the previous year.