Windhoek-“The FNB Value Index recorded its lowest level since Q2 in 2013 after quarterly growth tapered down to 2 percent during Q4 of 2016,” says Market Research Manager at FNB Namibia Daniel Kavishe.
In the latest FNB Housing Index for the fourth quarter of 2016, Kavishe noted that while the coastal region continued to still show strong property price growth, central Namibia prices had eased for detached property.
This came as the increased supply of sectional titles met a weakened demand environment, according to the latest estate agent survey. Accordingly, properties remained unsold for an average of 19 weeks.
“The housing market continues to show signs of correction as the latest overall growth rate aligned more with headline inflation rather than its usual trends.
“Looking forward, house prices are expected to remain depressed as the economy gradually recovers from fiscal consolidation, rising interest rates, high inflation and rising unemployment.
“Therefore, property price inflation is expected to remain below 10 percent for the most part of the year across the country,” Kavishe said.
With poor levels of affordability coupled with a brittle economic environment, FNB anticipated growth would go down 4 to 5 percent at the end of 2017. The latest discussion regarding capping rental property prices could further pose downside risks to growth, as demand for new property would decline.
“If the legislation makes it unattractive for homeowners to rent out their property, the market would invariably restructure with property purchasing prices trending downwards,” he noted.
Historically, the index tended to retreat during the fourth quarter, as prices normalised for that given year and as volumes declined.
“However, the sharp downturn in the index seems to further be reflected by a slower growth rates (6 percent year-on-year) in the median price across major towns.
“The overall median price recorded was N$850,000, still relatively high considering the gross earnings of the individual would have to be over N$25,000 per month to afford this type of bond, whilst the average monthly income in Namibia is estimated at around N$6,600 per month, based on the latest labor force survey (LFS, 2014).
“The Volume Index, which continued to remain volatile, treads in negative territory thus coming in at -19 percent during the same period.”
When looking at the central region, the median prices in the large house segment stood at N$3.5 million. In the medium segment, houses sold at median price of N$1.65 million, 6 percent higher than the same period last year.
The small house segment saw prices adjusting by 25 percent to N$845,000, further proof that market activity was concentrated in this segment.
The central house price index however, had already dipped into negative territory (-2.94 percent) for the quarter suggesting that relative to the prior year’s growth, prices had started to weaken.
Property prices at the coast continued to enjoy robust price growth after prices soared 19.16 percent quarter-on-quarter. However, volumes remained weak contracting by 36 percent in the final quarter.
A glimpse at northern Namibia revealed that volume growth across most northern towns contracted -4 percent q-o-q, while price growth in the area remained flat. Price deflation in certain towns was balanced by price growth in others.
The main towns of price growth remained Katima Mulilo, Omuthiya, Oshakati and Eenhana. More specifically, property prices in Katima soared 84 percent to N$997,000 during 2016, to bring the five-year increase to a whopping 253 percent.
Despite the thin volumes, property prices in the south of the country declined during the fourth quarter and for 2016 as a whole.
On an annualised basis, prices in Mariental and Keetmanshoop contracted by 19 percent and 8 percent respectively, while Lüderitz was the outlier after its prices soared 22 percent off a low base.