Property Boom Continues

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By Petronella Sibeene WINDHOEK Demand for credit by the private sector in the residential property market has increased for the past year by at least 17 percent for the year ended February 2006. This was revealed by the First National Bank (FNB) quarterly residential property index report covering the entire property market released yesterday. Introduced for the first time since its launch in March this year, the first quarterly update on the behaviour and performance of the property market indicates that the N$ 1.2 billion (17 percent) increase in credit in the private sector has been due to demand for home loan credit which increased by 20 percent for the year that ended February 2006. Based on the Namibian commercial banks data, the increase in lending for home loans could be attributed to increases in house prices. The report further reveals that the trend could have also been brought about by some competitors who are eager to lend out money in terms of re-advances in order to increase their share, given the fierce competition in the industry. “This trend is likely to continue and as competition for the market in home loans intensifies, the availability of home loans becomes easier and more lending terms will ensure further support for the residential property market,” report shows. When compared to the quarterly index for quarter one of 2006, there has been a decline to 113.3 from 115.68 in 2005 for quarter 4. According to the FNB Manager of Market Research and Development Alex Shimuafeni, the decline, based on the FNB Home Loans Division valuations, is mainly due to a quarter-to-quarter decline of house valuations recorded in high priced areas. These areas include Klein Windhoek, Ludwigsdorf and Eros – all registered in the sub-indices that are below the overall Windhoek index of 113.3. These indications he added, do not imply a decline in property prices but rather lower valued houses being valuated for that period. Shimuafeni further stated that this could mean good news for investors and developers since these houses will be selling for a lower price than what the average market prices are. “The decline in demand for properties in high priced areas is as a result that the high earners who could afford these houses are limited within Namibia and in general, most Namibians are highly indebted. This makes affordability in these areas difficult as well,” the report added. Driven by the increasing demand, properties in areas such as Dorado Park and Rocky Crest recorded sub-indices that are higher than the Windhoek index over the quarter under review. “Other top performing areas are Windhoek West and Pionierspark with sub-indices of 119.3 and 126.9,” said Shimuafeni. Meanwhile, the construction industry remains active in the country with more than N$800 million worth of construction works carried out during the year under review. Building plans which received an approval by various municipalities and town councils totalled N$1.5 billion in the same year. The Namibian property market does not only depend on the re-selling of houses but also renovations and alterations made to existing structures. The index covered most of the suburbs in Windhoek though areas such as Goreangab and Okuryangava were excluded due to lack of data. FNB Namibia Home Loans commands 45 per cent of market share in the financing of home loans. The next index report will be released in July 2006.