By Confidente Reporter
PERSISTENTLY weak economic growth, rising unemployment and weak household disposable income growth, have begun to weaken property prices in Namibia.
This is according to the latest Housing Price Index (HPI) released by FNB Namibia.
“For the month of April, the average annual rate of growth has fallen to 7 percent in nominal terms, despite the very strong prices growth in the coastal and southern regions,” explained Josephat Nambashu, Market Research Analyst at FNB Namibia.
“When adjusted for inflation and according to new methodologies, the real house prices fell marginally by 0.8 percent and have been negative month-to-month since December 2016.”
Nambashu said that across the country there were 16 towns with positive growth, while the list of towns with negative growth is increasing, against a backdrop of persistently weak economic data.
“While subdued wage growth has likely contributed to the weakening of property prices, there is a general feeling of uncertainty concerning the performance of the market, in terms of estate agent perceptions, suggesting that other macro measures from political and economic instability and solid supply additions of mainly apartments, are compounding the headwinds in the domestic property market,” Nambashu said.
Evidently, the search for secure neighbourhoods, with adequate amenities, influenced significantly the price dynamics in the capital.
High-income suburbs such as Klein Windhoek, Academia and Olympia are currently enduring negative price growth, while Ausblick, Eros, Finkenstein and Kleine Kuppe are enjoying abnormally high price appreciation.
This divergent trend is typical of a market in transition.
“Given the negative economic data, we do expect the high-income suburbs to trend downwards with more consistency. The middle-income suburbs are a bit more consistent, with prices increasing in the double-digit range, with the exception of Academia (-21.6 percent) and Hochland Park (5.7 percent).
“The decline in Academia is ascribed to the land that was auctioned in 2014 and as such should not be mistaken for weakening underlying fundamentals.
“Low-income suburbs showed very divergent trends as well, with prices increasing by as much as 24.1 percent in Okuryangava, while falling by as much as 4.5 percent in Wanaheda. During economic downturns, we generally see property prices in the lower income segments strengthening as households downsize, resulting in higher demand for low income suburbs,” Nambashu said.
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