Industry

Residential rental price records 2.1 per cent annual contraction

Summary

Residential rental prices posted an annual contraction of 2.1 per cent at the end of December 2020 from -0.8 per cent recorded in December 2019, the FNB Residential Rental Index report indicates.The report shows the rent price slip into negative territ…

Residential rental prices posted an annual contraction of 2.1 per cent at the end of December 2020 from -0.8 per cent recorded in December 2019, the FNB Residential Rental Index report indicates.

The report shows the rent price slip into negative territory brings the national weighted average rent to N.dollars 6 747 at the end of December 2020, compared to N.dollars 6 991 recorded during the same period in 2019.

The rent for a one-bedroom unit averaged N.dollars 3 670 on an annual basis and spurred the growth of 4.9 per cent year on year (y/y) from -6.5 per cent y/y recorded a year ago.

Affordability within the two-bedroom, three-bedroom and more-than-three-bedroom units on the other hand, continues to be on an uphill path, with annual rent prices recording contractions of 2.3 per cent, 5.0 per cent and 3.4 per cent y/y to N.dollars 6 882, N.dollars 9 728 and N.dollars 17 121, respectively, the report reads.

“We view the prevailing fundamentals in the rental market to be permeated by three key themes. Firstly, the deteriorating demand for higher-priced properties means that landlords are seemingly left with little choice but to curb their expectations when setting their asking price. Secondly, many short-term and leisure rental properties moved onto the long-term rental market in 2020, after a sharp decline in tourism activity potentially due to COVID-19 induced travel restrictions. Lastly, we are also starting to see a growing interest amongst tenants choosing to take advantage of lower interest rates to buy houses, whilst some are opting to move in with families, mainly due to job losses or reduced income,” FNB Market Research Manager Frans Uusiku noted.

Tsumeb recorded the highest growth in rent prices of 35.8 per cent y/y followed by Ongwediva with 15.2 per cent y/y over the review period.

Walvis Bay continues to bear the brunt of rental contractions, recorded at -42.2 per cent y/y followed by Oshakati (-30.9 per cent y/y), Ondangwa (26.8 per cent y/y), Rundu (-20.2 per cent), Swakopmund (-16.7 per cent y/y), Okahandja (-5.8 per cent y/y) and Windhoek (-2.1 per cent y/y).

Source: Namibia Press Agency