House price growth decelerate according to latest report

PUBLISHED 16 NOV 2017   

The latest FNB Housing Index released yesterday showed that the average house in Namibia in June cost 6,4% more than a year ago, which shows a downward increase as from June 2015 to June 2016 when the increase was 11,6%.

The economy slowing to a low 1,1% last year and the continued job shedding means that disposable income is under significant pressure, macro-economic challenges which continue to weigh on the Namibian housing market as annual price growth decelerated to 6,4% for the month of June. 

This is a substantial decline from 11,6% recorded a year ago. This is even more evident in real price changes (i.e. CPI inflation-adjusted) which has been in the red for the past seven months on the back of upward sticky housing inflation as measured by the Namibia Statistics Agency. 

It therefore comes as no surprise that that housing demand has fallen and that properties are spending 24 weeks on the market on average.

“That being said, housing demand should remain weak and affordability ought to become more challenging against this sombre macro-economic backdrop,” said the bank.

The average nominal value of central residential properties jumped 9,0% in June compared to a year ago. In the capital, prices were up 9,1% to June, with the average price now at N$1 588 000. Gobabis saw house prices increase by 3,6% over the last 12 months to stand at N$775 000. 

At Okahandja – where the volume of property transactions increased by 8,9% (thanks to the construction boom in that area) – the average price fell by 1,5% over the year to stand at N$848 000. 

The continued growth in the coastal region is driven by the strong growth at Swakopmund and Walvis Bay, which both grew by 22% on an annual basis. 

Southern property prices increased by 15% to June, while volumes remained almost unchanged and rather thin. 

Northern house prices dipped for the third consecutive month, to average N$835 000 to June. Oshakati and Rundu prices fell by 29,6% and 20,5%, respectively and as such had a strong bearing on the overall picture in the northern region. 

“As the economy gradually recovers, growth opportunities remain limited to the primary sectors, where mining and agriculture are rebounding from poor performances last year. However, employment and income growth is still constrained and, coupled with low consumer and business confidence, weighing on housing demand.”

With average time on the market increasing to 24 weeks (27 weeks in the upper income segment alone), the residential property market has shifted from a sellers' market to a buyers' market, causing price growth to drop notably, save for the coastal market, the bank said.

Mortgage advances have consequently decelerated. Therefore, the prognosis for the domestic market is less favourable as we expect property prices to decelerate even further. 

– FNB Namibia