FNB rental index for housing market remains stable

The First National Banks (FNB) rental index for housing market still remains stable reflecting a steep improvement showing a contraction of 0.8 per cent in December 2019 from a contraction of 8.6 per cent recorded in December 2018.

The continued recovery in the rental index growth is supported by price pressures stemming from the two to three-bedroom segments which registered growth of 6.6 per cent and 16.2 per cent year on year, respectively, compared to corresponding contractions of 10.2 per cent and 11.7 per cent year on year in 2018 and 2019 respectively, a media statement availed to Nampa on Friday indicates.

The growing participation in the 2-3-bedroom segments and the resultant price pressures has brought the average national rent price to N.dollars 6 992 as at December 2019.

FirstRand Namibia Market Research Manager, Frans Uusiku said that this translates into an annual growth of 3.6 per cent on a quarterly basis and Swakopmund recorded the highest rental prices in the fourth quarter of 2019, with the average rent recorded at N.dollars 9 274 per month.

This reflects a significant growth of 26.6 per cent year on year due to high volumes of rental activity executed under the three-bedroom segment, whilst it also points to deteriorating affordability of houses in the coastal towns. Windhoek is the second highest with respect to rental prices, with an average rent of N.dollars 6 545 per month, and reflecting a contraction of 2.5% year on year, he said.

Uusiku added that the annual contraction in rental prices in the fourth quarter of 2019 was witnessed across other major populated towns such as Ondangwa recording -34.7 per cent, Rundu -22.4 per cent Ongwediva -17.1 per cent with an exception of Oshakati, which saw growth of 6.7 per cent ear on year.

The rebound in rental prices since May 2018 has continued its upward trajectory, although growth remains in negative territory, said Uusiku.

The notable growth in rental activity for the 2-3-bedroom segments and the resultant price pressures is indicative of an increase in demand for these type of rental units as houses become unaffordable on the back of subdued real wage growth. Nonetheless, the price to rent ratio of 13 means that the national average house price is 13 times the national average rent that could be earned per annum on a residential property, he said.

Source: Namibia Press Agency