Windhoek getting expensive for working-class - by Desie Heita
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Windhoek getting expensive for working-class
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WINDHOEK – The first signs are here of how costly Windhoek is to become for the middle class in the coming years. With the weekend auction o...
WINDHOEK – The first signs are here of how costly Windhoek is to become for the middle class in the coming years. With the weekend auction of erven as the precursor, some economists are already reaching for alarm bells.
The prices per square metre at last weekend’s City of Windhoek auction show that Windhoek’s working class will carry the burden of a tough life, while those in the high class will have a much affordable living style.
Erven are more expensive in middle class areas compared to luxury areas, and commercial banks have very tight lending criteria for undeveloped land. Often, mortgaging is the only available financing medium for the middle class.
FNB Namibia’s manager for research and competitor intelligence, Namene Kalili, says, after the analysis of the auction data, the prices make one “sceptical on the affordability of the selling prices”.
Erven in the middle class suburbs of Dorado Park and Rocky Crest are more expensive compared to erven in the posh suburbs of Klein Kuppe and Auasblick. Not only are they expensive in terms of the price per square metre, but also the difference in the total price between the two suburbs is roughly N$80 000 more for erven in Auasblick.
This is despite the fact that erven in posh neighbourhoods are bigger than those in the middle class residential areas.
As a result, the fetching price for residential land in luxurious areas of Windhoek is far cheaper, between N$420 and N$700 per square metre compared to the starting price of N$1 000 per square meter in middle class residential areas.
To acquire a 1,500 square metre erf in luxurious areas, a buyer paid N$605 000, while the price for an odd 600 square metre erf in a middle class suburb is at N$606 000. Kalili reckons the reason for such high pricing in middle class residential areas is the appetite by developers to put up mass-dwelling units, or flats, something that is encouraged by the City of Windhoek.
The City allows subdivisions in areas like Rocky Crest and Dorado Park, something that property developers have come to love because they can erect a high density dwelling on the erf, for a much larger yield.
No subdivision is permitted in luxurious areas, and conditions for building in these areas are strict. Wire fencing is, for instance, not allowed. Not permitted, too, are shiny or reflecting roofing materials, and anything deemed not appropriate for a noble residential area.
Compounding the hurdles further is the fact that mortgage lending, which is the only financing medium for the middle class, comes with conditions that make the purchase of these erven difficult. Currently, many commercial banks offer between 60 percent and 80 percent of the purchase price. This means to purchase N$606 000 land in Dorado Park, a person must have a minimum saving of about N$250 000 to top up the loan because the bank would only finance about half of the asking price.
“We are a bit sceptical on the affordability of the selling prices as lending criteria for undeveloped land from commercial banks remain tight,” says Kalili.
City of Windhoek’s five-year financing option is also not conducive, because it is most likely to stretch household cash flow. An estimated pay-back plan is about N$16 000 per month.
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The prices per square metre at last weekend’s City of Windhoek auction show that Windhoek’s working class will carry the burden of a tough life, while those in the high class will have a much affordable living style.
Erven are more expensive in middle class areas compared to luxury areas, and commercial banks have very tight lending criteria for undeveloped land. Often, mortgaging is the only available financing medium for the middle class.
FNB Namibia’s manager for research and competitor intelligence, Namene Kalili, says, after the analysis of the auction data, the prices make one “sceptical on the affordability of the selling prices”.
Erven in the middle class suburbs of Dorado Park and Rocky Crest are more expensive compared to erven in the posh suburbs of Klein Kuppe and Auasblick. Not only are they expensive in terms of the price per square metre, but also the difference in the total price between the two suburbs is roughly N$80 000 more for erven in Auasblick.
This is despite the fact that erven in posh neighbourhoods are bigger than those in the middle class residential areas.
As a result, the fetching price for residential land in luxurious areas of Windhoek is far cheaper, between N$420 and N$700 per square metre compared to the starting price of N$1 000 per square meter in middle class residential areas.
To acquire a 1,500 square metre erf in luxurious areas, a buyer paid N$605 000, while the price for an odd 600 square metre erf in a middle class suburb is at N$606 000. Kalili reckons the reason for such high pricing in middle class residential areas is the appetite by developers to put up mass-dwelling units, or flats, something that is encouraged by the City of Windhoek.
The City allows subdivisions in areas like Rocky Crest and Dorado Park, something that property developers have come to love because they can erect a high density dwelling on the erf, for a much larger yield.
No subdivision is permitted in luxurious areas, and conditions for building in these areas are strict. Wire fencing is, for instance, not allowed. Not permitted, too, are shiny or reflecting roofing materials, and anything deemed not appropriate for a noble residential area.
Compounding the hurdles further is the fact that mortgage lending, which is the only financing medium for the middle class, comes with conditions that make the purchase of these erven difficult. Currently, many commercial banks offer between 60 percent and 80 percent of the purchase price. This means to purchase N$606 000 land in Dorado Park, a person must have a minimum saving of about N$250 000 to top up the loan because the bank would only finance about half of the asking price.
“We are a bit sceptical on the affordability of the selling prices as lending criteria for undeveloped land from commercial banks remain tight,” says Kalili.
City of Windhoek’s five-year financing option is also not conducive, because it is most likely to stretch household cash flow. An estimated pay-back plan is about N$16 000 per month.
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