April housing index shows growth in central, northern regions

The housing index grew by 13.8 percent on an annual basis towards the end of April, recovering significantly from the slow month of March and diverging from a relatively slow first quarter, says FNB Namibia.

The index prices represented fast movement in the central and northern regions of the country, where the respective housing indices increased by 21.9 percent and 13.2 percent (Y-o-Y) respectively. The property index in coastal towns has slowed considerably as new developments have softened the price within that market.

The index grew by 6.8 percent on a monthly basis, with overall median prices in Namibia settling in at N$750k. The data was released by Daniel Kavishe, market research manager at FNB Namibia.

Kavishe said that according to the FNB Housing Index central property prices continued to grow with data from Windhoek indicating a 22.2 percent growth in median prices, while prices in the Okahandja area grow at 9.8 percent (Y-o-Y). The suburbs of Kleine Kuppe, Otjomuise and Eros Park recorded significant shifts in their price levels.

Kavishe explains: “The medium price in Otjomuise was N$783k, while for Kleine Kuppe it was N$3m; both category prices grew by 40 percent compared to their medium price average of 2014.

“In Okahandja, property prices flattened around the N$750k mark, which could create possible buy-in opportunities for first time home buyers. Volumes in the region increased by 12 percent but with the continued uptick in development the growth rate should pick up.”

On the coastal front property prices managed to contain the rapid increases with property prices coming in 12.7 percent lower (Y-o-Y), according to the coastal index.

Median prices in Swakopmund and Walvis Bay ranged at about N$800k. The stable prices reflect potential for further land development in several parts of the coast and could lead to development of prime real estate across the town’s periphery, says Kavishe. Volume movements indicate that there was an increase in property transactions by 15.6 percent, which suggests a rising interest amongst first time homeowners at the coast.

The northern property index continues to grow favourably, recording a growth level 13.2 percent Y-o-Y. On a monthly basis, prices grew by 19.1 percent, lower than the growth in February and March. Monthly transactional activity picked up10.9 percent, which is positive for the region.

Kavishe said that Grootfontein recorded an increase in median prices of 37.2 percent, with median prices teetering at N$727k.

“Ongwediva which has become the central business hub of the region has recorded a pick-up in median prices of 38.4 percent, with recorded prices coming in at N710k.

“With activity picking up in Oshikango a massive transaction has boosted median prices in the area to over N$1m. This isn’t surprising as trading activity beefs up due to recent agreements that allow unhindered trade flow of kwanza and the Namibian dollar in that location. Developers however do not foresee a rapid rise in property transactions or prices in that area.”

Venturing to the south, Kavishe says prices in Mariental and Keetmanshoop continue to gain traction, reflective of improving economic conditions in those areas. The median prices that were registered at the end of April were just over N$700k. Very few transactions were recorded over the period, which has contributed to the spike within the categories. Keetmanshoop prices continue to improve with current median prices 44 percent higher than the average median prices in 2014.

Kavishe maintains that the recent deal between government and the land activist movement Affirmative Repositioning will act as a temporary saving grace, avert a crisis and appease potential investors in the Namibian market.

“The proposed deal to service land at nationwide level should help lift the current strain, but not with immediate effect. It comes a few minutes shy of late with current property prices elevated and still ballooning. Government’s proposed system of rent controls may be administratively complex and unfortunately ignores the crucial fact that we could start perpetuating a culture of leasing versus that of ownership. We therefore anticipate that growth in prices will remain at these levels fuelled mainly by favourable yields that the property market is creating for both developers and individual investors. Any significant drop in prices would take a while before coming into effect.”