A look at the housing market

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WINDHOEK – Real house prices started slowing down in June this year for the first time since March 2009, mainly because of the movement of prices for houses in the central and northern parts of the country. There was however upward movements in house prices at the coast, but then again the coastal housing market does generally peak in August and drop off from September to March. The latest analysis is from the FNB Housing Price Index for June this year.

The expectations were of a further slowdown in housing prices as houses sold at 4 percent below the asking price in the third quarter, which according to the FNB Housing Index “is further evidence of downward price pressures building in the local housing market”.

Although the FNB House Price Index increased by 1 percent month on month, it contracted by 1.4 percent year on year in nominal terms. When striped of inflation the real house prices appear to have been decelerating during 2013. For the first time since March 2009, monitored house prices have contracted on a year on year basis. This was mainly due to house prices contracting in the central and northern property markets by 1 and 7 percent respectively.

For the central markets property prices contracted in the lower price segment, while for the northern market, house prices contracted significantly across all price segments. “Declining house prices in the northern property market were further aggravated by declining volumes in the upper price segment, while increasing in the middle to lower price segments and therefore there was a shift in the marketing mix towards smaller, less expensive properties. Overall volumes climbed 8 percent year on year, with reasonable volume growth across all property markets except the central property market, which contracted by 17 percent and battled with thin volumes across all price segments,” said the report author, Namene Kalili.

Land delivery continued to improve as 40 vacant stands were mortgaged, while 22 200m2 of land was mortgaged by developers with a maximum yield potential for 50 free standing homes, up from 23 free standing homes the previous month but still relatively low.

Central property prices fell by half a percentage point month on month to bring the annualised growth rate to 2.5 percent from last month’s 12.1 percent. The general price trend has returned to negative territory on the back of weaker house prices in the lower price segment, where house prices contracted by 5.9 percent year on year.

Downward price pressures have also begun to surface in the middle to upper price segments over the past month, where house prices contracted respectively by 0.8 and 1.3 percent month on month. The year to date data shows that house prices in Okahandja are down 8 percent,

Windhoek property prices are down 3 percent, while Gobabis property prices are flat.

The central market continues to struggle with volumes, which were down by 17 percent year on year. The lower price segment was the hardest hit, as volumes fell by 27 percent year on year, followed by the upper price segment which was down by 17 percent year on year. Unfortunately land delivery continued to disappoint, with one vacant stand mortgaged through the month. Developers did not mortgage any new land in the central market.

Coastal property prices continued to increase strongly through June, growing by

31 percent year on year and by 16 percent from the previous months.

Property prices in the upper price segment rose by 18 percent year on year while property prices in the middle price segment increased by 5 percent year on year. This suggests that the 31 percent year on year increase was partly caused by rising property prices in the middle to upper price segments and partly by a shift in the property mix. In this regard, volumes have shot up by 34 percent year on year and by 4 percent from the previous month.

Northern property prices continued on a downward trend, shedding a further 7 percent of their value from the previous month and therefore northern property prices were down 8 percent year on year. Property prices in the middle to upper price segments have fallen by 19 percent year on year with downward price pressure still persisting in the middle price segment over the shorter term. This was due to new housing supply in the middle price segment where volumes grew by 22 percent year on year.

New housing supply has helped push up overall volume growth by 6% year on year and 36 percent month on month. Most of the shorter term growth impetus came from the lower price segment where volumes grew by 50 percent month on month due to the supply of new NHE houses on the market. A total of 22 erven was mortgaged during the month at an average price of N$53 per square metre, which was 15 percent higher than the previous month’s average. About 16 500m2 of land was mortgaged by developers with a maximum yield potential for 38 free-standing homes.

Southern property prices fell by 37 percent year on year or by 45 percent from the previous month. House prices in the south fell across all price segments, with properties in the lower price segment shedding 20 percent of their value over the past year.

“But at the same time volumes in the lower price segment have shot up by 43 percent albeit from a very low base at five houses in total. Therefore declining house prices were aggravated by the increase in the number of lower priced properties sold. The year to date data shows that house prices were under pressure in Lüderitz and Mariental. But caution must be exercised when looking at southern house prices as the numbers are very thin, said the report.

By Staff Reporter 

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