Weak Supply Pushes House Prices in March

HOUSE prices increased in March after supply volumes continued to weaken across the country.

Namene Kalili, Research and Competitor Intelligence manager at FNB Namibia said yesterday that most of this weakness came from markets in the central and coastal regions where transaction volumes have come under pressure.

“These two markets have seen substantial increases in property prices over the past year, with property prices up 35% and 61% respectively, averaging N$869 000 in the central market and N$791 000 at the coast,” Kalili said.

Survey results for the first quarter of this year indicated that willing and able buyers were dwindling as they struggled to afford properties at current market prices, he said.

Ninety stands were mortgaged in March, with 13 in the central property market, 30 at the coast, 27 in the North, and the remainder in the south.

Developers mortgaged a further 357 700 square meters of land during March, with a maximum yield potential for 835 free-standing homes.

Kalili said most of the upward price pressure came from the upper price segment, where property prices increased by 35% year-on-year, while volumes declined by 10%. Property prices in the middle price segment increased by 11% to end the month at an average price of N$1 221 000.

In Okahandja, prices increased by 22% in Gobabis by 2%, whereas Windhoek experienced a contraction of 4%.

At the coast, property prices increased by 61% on an annual basis with a median price of N$791 000.

The upward price pressure came from the lower to upper price segments, where property prices increased by 21% and 24% respectively. Property prices at the coast rose the fastest in Walvis Bay (38%), followed by Swakopmund (21%), and Henties Bay (6%).

In the North, property prices soared by 26% on an annual basis to N$510 000 and extended their steep growth trajectory to seven consecutive months.

Kalili said most of the growth continued to be driven by properties in the upper price segment, which have increased by 64% in March and with volumes up by 75%.

In the south, property prices fell by 2% year-on-year to end the month at a median price of N$404 000. Property prices in Keetmanshoop rose by 7%, in Luumlderitz by 9%, while they increased by 15% in Mariental.

The survey shows that estate agents ascribe the weak market activity to the high property prices, while buyers struggle to qualify for home loans at the current market prices coupled with very long property turnaround times (88 days).

“Although there has been a significant increase in land delivery and developer activity, this has not translated in a corresponding increase in new housing supply for the month of March. Therefore, property prices will remain stubbornly high as long as volumes remain weak. But we remain confident that volumes will recover during the second and third quarters, but not enough to limit price movements to single digit growth for 2014,” Kalili said.

Source : The Namibian