By Hilary Mare
THE FNB Namibia housing index has identified lack of adequate stand-alone housing units as one of the reasons that has kept house prices sky rocketing across all regions.
The report released last week denoted that property prices rebounded in the third quarter of 2016 recording a 27 percent increase compared to the same quarter in 2015 with the growth also fuelled by central and coastal price inflation as is seasonally expected during the third quarter.
“We remain cautiously bearish about the property market, despite the price recovery during the third quarter. The limited supply around stand-alone units has kept the prices elevated across most regions despite demand waning. We anticipate further weakness in demand in central Namibia, but improvements across the northern and coastal towns.
“Fundamentally, the consumer’s prospects remain daunting as they wrestle with higher inflationary environment and a rising interest rate cycle.
Wage growth remains low as business tries to contain costs within constrained economic backdrop. Most developers in the central area have stated weaker demand caused by both tighter credit control conditions from financiers and a cautious view from consumers.
“In the affordable income space, where demand is slated to be the highest, securing financing for the alternative building methods is pivotal in ensuring absorption into the property market. These structures, once accredited for durability and tested for structural integrity, will add substantial supply to the market and would potentially cause prices to deflate further,” the report outlined.
The volume index remained in negative territory for the 10th consecutive quarter printing -17 percent in 3Q2016, as transaction demand staggered across the regions. The narrative remains the same as the poor volume growth remains consistent with the weakening economy.
At the end of the third quarter the median price printed at N$900, 13 percent higher than prices last year. Notably, the highest median prices recorded emanated from Henties Bay, Swakopmund and Windhoek, which currently stand at N$1.2 million for the coastal towns and N$1.4 million for Windhoek.
Daniel Kavishe, market research manager, FNB Namibia added: “The movements were largely driven by higher prices in the upper segment – approximately 34 percent higher across the two regions- and faster than expected price inflation in the lower-end, approximately 23 percent higher across the two regions.
“We remain cautiously bearish about the property market, despite the price recovery during the third quarter. The limited supply around stand-alone units has kept the prices elevated across most regions despite demand waning. We anticipate further weakness in demand in central Namibia, but improvements across the northern and coastal towns.”
Looking forward, Kavishe estimated, “house price growth to taper down to 10 percent at the end of 2016 with potential upper bound at 13 percent. The 12-month cumulative growth in volumes remains negative at -20 percent which poses downside risks to overall market demand which continues to soften.”
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