Growth in property prices reined in – March housing index

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FNB Namibia’s latest housing index warns that a slower growth rate of property prices may not be reflective of city-based prices which have stabilised during the past few months, yet remain elevated. According to Daniel Kavishe, Market Research Manager, FNB Namibia Holdings, the gradual interest rate hiking cycle should put downward pressure on the middle income segment’s housing affordability over the short to medium-term and notably deter strong price growth in the segment.

“Despite lower than anticipated volumes, overall supply should quicken as development increases across the country. The rise of communal centres should further impact the housing market over the next few years. We therefore reaffirm our view of a gradual tapering in house prices in 2015, where prices are expected to print 12 to 15 per cent higher than 2014. This will be wholly in line with the normalisation of real incomes coming into 2015,” noted Kavishe.

He added however that the growth in property prices in Namibia was reigned in after the sharp increases during the final quarter of 2014.

Kavishe this week explained in the FNB Housing index for March 2015 that quarter on quarter, property prices remained robust growing at a rate of 5 per cent which was in line with current economic conditions within the market.

According to the monthly data, the median house price has stabilised at N$734 000 since its peak in December of N$842 000. The overall slower growth in property prices is seasonal with an expectation that prices will pick up during the latter part of the year. Volume growth within the market showed an increase of 12.8 per cent at the end of March (year on year) with an overall quarterly growth of 16.4 per cent.

Kavishe went on to say that central property prices had moderated between N$690 000 for the lower end of the market to N$3 million in the upper end for the month of March.

“Median prices for the quarter however indicate N$818 000 as the average house price factoring towns outside Windhoek’s periphery. Windhoek median prices have breached the million dollar mark, 5.0 per cent higher than the median for 2014. In Okahandja, prices have increased by 9.2 per cent as compared to last year’s prices while Gobabis prices increased by 11.1 per cent. This could possibly point to higher overall prices for the year as growth in prices in 2014 was robust in the third and fourth quarters. The movement of the data suggests that house prices of the central region were 6 per cent lower in March but this should be viewed as a sluggish month and not necessarily reflective of the whole quarter.”

When looking at the coastal housing prices, the FNB housing index states that the coastal property index showed a decline by 8.1 per cent year on year at the end of March.

Prices in Walvis Bay dropped with increased supply during the given month. Volumes were up 41.3 per cent, the fastest growth across all the regions as new residential developments were added.

Henties Bay median prices have edged up quite considerably with property prices falling within the N$960k mark.

In Swakopmund, median prices were lower at N$735k highlighting the widening supply disparities between the higher end and lower end prices. This can clearly be seen with the annual growth rate of low end house prices growing by 31.4 per cent to a median of N$642k pushing the overall distribution of houses lower than the previously recorded amounts.

Coastal towns remain an area of interest with Swakopmund housing one of the largest municipal land areas across the country.

Kavishe added: “Prices in northern Namibia are currently growing at the fastest rate specifically coming from a very low statistical base. The overall index recorded a growth in prices of 7.3 per cent across the 33 towns that are monitored. On a quarterly basis, prices in the region are up 10.8 per cent which confirms the overall market sentiment that northern towns are amongst the fastest growing within the country.

Eenhana has recorded the fastest growth rate over the past five years and remains a constituent of interest.

Prices in Oshakati dropped sharply (32 per cent) to N$660 000 after they rallied during the fourth quarter of last year. Developments seem to be taking place in areas of Omuthiya which should boost prices in this area as well. Median prices in the region still remain affordable at N$547 000.”

Regarding prices in the south it was stated in the report that these prices increased considerably specifically in areas like Mariental where the prices in the first quarter shot up by 29 per cent.

Said Kavishe: “The overall index for the region has remained buoyant with prices shooting up by 51.9 per cent at the end of March. Pricing in the region has historically been muted, safely landing within the N$400 000 to N$600 000 bound. The prices are mainly reflective of Keetmanshoop and Mariental which generally carry the highest median prices. Volumes of transactions within the sector were however down by 27.6 per cent year on year which implies slower property dealings during the period.”

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