Property Prices Continue to Soar


By Wezi Tjaronda WINDHOEK The value of houses in Namibia has increased over 100 percent over the past few years due to the strong macro-economic environment. The coming years should also see the same trend, which spells good news for property owners. If one puts one’s money into property, according to Martin Mwinga, First National Bank (FNB) Manager Asset Management and also economist, one could get better returns compared to other investments. In Windhoek alone, residential property have gone up by around 100 percent in the past five years, which represents an increase of 20 percent per year. This is contained in the First National Bank (FNB) Housing Index for quarter four of 2005, launched in the capital last Friday. The index, the first ever in Namibia, will be released every quarter, starting with the four quarters of 2005. The first quarterly report of 2006 is to be released in April. FNB Holdings Chief Executive Office, Vekuii Rukoro, said the bank came up with an index to help people make informed decisions when purchasing property. FNB Namibia accounts for 45 percent of the property loan market share. The overall index for Windhoek however indicates that property values have increased by 90 percent since 2001. The residential property market continues to be buoyant due to a growing economy, which means that consumers have more disposable income because of lower inflation and interest rates. Mwinga said at the launch of the housing index on Friday that property prices will remain high due to an expected growth in the economy, which is predicted to be in the range of five and six percent. With the expected major infrastructure development, which is expected to come about due to the country’s road map, Vision 2030, the property market stands to benefit, he said. Although some have said that there will be a bubble in the market, over the next five years, Mwinga said property owners and agents should expect an average increase of 15 percent because at the moment, non-performing loans as well as the debt income ratio are low. “If we mess up the economy, then there would be a bubble,” he said. The statistics indicate a growing demand for housing, which is supported by credit extension for home loans, which accounts for 40 percent of total bank advances. The index covers all the regions except for Omaheke. The south, however only saw an increase of 20 percent, which showed that the demand for property is not that high because of the unemployment situation, said Mwinga. The coastal areas have seen an increase in property prices of around 40 percent from 2001 to 2005. Although the increase could have been higher, Mwinga said the lower residential areas in Swakopmund brought down the prices As for Walvis Bay, the economic problems at the coastal town have seen a decline in property prices over the last two years. As for Windhoek, the areas that have had the highest increase of 80 percent and above over the year include, among others, Hochland Park, Olympia, Avis and Auas Blick. Mwinga explained that many black people had moved into these formerly white dominated areas after independence. “The demand for property in these areas exceeded supply and helped push up the prices,” he said. While whites speculated on their property, which pushed up the property prices, Mwinga said this happened to an extent that some people were pushed back to Katutura and Khomasdal. Windhoek’s population has grown from 147 000 in 1997 to around 273 000 at present, which shows that the demand for housing will continue to increase especially as people migrate to the informal settlements and graduate to the more formal settlement of Katutura as they get jobs.