Nam Has Second Highest Housing Price Increase

NAMIBIA recorded the second highest house price increase in the world in June after Dubai, the latest FNB House Price Index released yesterday shows.

Namene Kalili, manager research and competitor intelligence at FNB Namibia Holdings, said at a median price of N$774 000, households must earn at least N$23 000 per month to afford an average property.

“This is almost three times the average household income for urban households in Namibia. Based on our calculations, the income requirement for the lower price segment came in at N$15 000 per month. Less than 10% of the households in the country can afford a property in the lower price segment,” Kalili said.

According to the 2013 National Labour Force Survey released in March by the Namibia Statistics Agency, at national level, the ‘mean wage’ is N$6 802 per month. It was higher for males (N$7 315) than for females (N$6 125).

Across industries, the highest ‘mean’ (N$18 139) per month was found in the transport and communications sector, while the lowest is found in private households, where the mean is N$939 per month.

House prices increased by 29% year on year to bring the FNB House Price Index to 234,7 index points through June as house prices continue to increase in 2014 at a much faster pace than the long term trend over the past seven years.

Kalili said despite various policy interventions to increase new housing supply, volumes continued to trend downwards as fewer properties were traded from month to month and demand for properties continued to increase.

“It is this increased disparity between supply and demand that is driving house prices upwards so much so that Namibia had the second highest house price increase after Dubai,” he said.

The index showed that the land delivery remained weak at 61 stands mortgaged through June, with the trend beginning to point downwards.

LAND PRICES

Land prices were 23% higher and averaged N$140 000 for a 410 square metres plot. A further 393, 800 square metres of land was mortgaged by developers, with a maximum potential for 920 free standing homes, which brought the cumulative house delivery potential to 7 950 for 2014.

“However, developer activity had not filtered meaningfully into the new housing supply numbers as overall volumes continued to trend downwards,” Kalili said.

Property prices in the central region of the country increased by 20% on an annual basis to reach N$810 000 with most of the upward price pressure coming from the upper price segment, where property prices rose by 32% year on year to N$2,3 million per unit.

At the coast, property prices increased by 25% year on year to a median price of N$956 000 and although property prices continue to increase, near term data shows that this price growth is tapering as the market moves towards its August peak.

“Coastal property prices tend to track the tourism season and hence the coastal property price growth was concentrated in the upper price segment, where prices increased by 28% on an annual basis to end the month at a median price of N$2,2 million.

In the north of the country, property prices increased by 28% on an annual basis at a median price of N$530 000 on account of g price movement in the lower price segment. In the south of the country, property prices increased by 287% to end the month at a median price of N$702 000, but Kalili said with five properties traded in the month, one should not read too much into this figure.

He said despite TIPEEG and the Mass Housing Project, land delivery struggled to find directions, with the near term data pointing towards waning land delivery.

Recent land sales around Windhoek show that individuals have little chances of buying land as most of it is bought by property developers.

EXPENSIVE LAND

At a recent land sale by Trustco at the Elisenheim Lifestyle Village, plots were all sold within 24 hours to mostly property developers. Estate agents encouraged their disappointed clients who failed to buy land at Elisenheim to try their luck at the auction next month in Academia, near the University of Namibia.

The City of Windhoek, Betula Nigra Investments and Old Mutaul will auction 114 residential zoned erven on 16 October of which 50 erven will be reserved for first time buyers. The prices for the erven will range between N$420 000 and N$612 000, which is far more than most Namibians can afford and goes against the promise the city made last year offering affordable land to low and middle income earners.

In June last year, Windhoek mayor Agnes Kafula said the city would spend over N$200 million on the servicing of land in Otjomuise Extension 4, Otjomuise Extension 10 and Academia Extension One, under the Targeted Intervention Programme for Employment and Economic Growth (TIPEEG). She said at that time the city would make available over 1 000 erven in these areas through the ‘offer to purchase’ method to low and middle-income earners in the city.

Kafula said the method was a new approach which is meant to ensure prices of erven remain affordable and are within the reach of the target market.

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Source : The Namibian

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