By Desie Heita
Windhoek residents are a people in debt with half of the middle class mortgaging their houses for that extra cash in the pocket, it has been revealed.
Current economic hardships have put households under siege to an extent that they are forced to live as the Americans, who not so long ago, survived on their house mortgages, economists and analysts say.
Sadly, for the low-income class, the option of mortgaging their property has eluded them, probably because they neither know better nor do they have the bargaining power over their financial institutions.
This is the picture painted by the latest First National Bank housing index for the first quarter of 2008. The housing index shows that more than half of Hochland Park residents – “the typical middle class residence” – refinanced their houses in the first quarter.
In Khomasdal, the refinancing figure is at 45 percent, slightly lower than the 52 percent in Hochland Park.
“It is the consequence of the current economic times. People are constrained as the cost of living has gone up,” said Daniel Motinga, Senior Manager for Market Research and Intelligence at First National Bank.
The report only looked at the Windhoek property market.
“Homeowners are increasingly valuating their properties to assess the level of equity and not necessarily to dispose of their houses,” said the Housing Index report.
Motinga says households are looking at their total balance sheet only to realise that they need extra money to cope with the rising costs in food, fuel and other items.
Those at the lower end of the market are squeezed to such an extent that nearly 40 percent of their wallet is dedicated to food and other necessities.
Instead of opting for overdrafts, households go for mortgaging, a facility offered by most commercial banks. The mortgaging does not increase the housing repayments. Such options have allowed consumers to withdraw money against their properties.
“They look at their total balance sheet and see what can be done to increase the cash flow and maintain their standard of living,” said Motinga.
The housing index report says the trend of equity extraction by Windhoek residents would continue for some time.
As for the sales of houses, however, the housing index says the “market is tight”. The sales activities are in the lower end of the market, with Khomasdal, Katutura and Windhoek Central recording most sales activities.
Houses of higher value are taking as long as seven months to find a single buyer, compared to a hundred people who would show up for the sale of a house with a lower value.
As at the end of April, new housing loans grew by 10 percent compared to the more than 20 percent recorded not so long ago. This suggests that the overall demand for residential property is slowing down, says the report.
Motinga says although this might continue for some time, there would be an upturn in the near future. He also said the situation is not as bad as it is made to look, saying there were times when the nation lived with inflation at 15 percent and interest rate at 20 percent “but people survived”.