Average central property prices ‘consistently’ above N$1 million

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Edgar Brandt

Windhoek-The central region of the country continues to lead the market in property prices, trading consistently above

N$1 million since early 2015. On average significant price growth has been recorded in the central parts of the country with Gobabis properties averaging
N$800 000, Windhoek properties averaging
N$1 231 000, while Okahandja averages
N$1 004 000. The northern regions, which are currently second in volume (32 percent of total) and second last highest in value, at just below N$700 000 since May 2015, produced the least in growth at 2.7 percent over the past 12 months, down from 19 percent growth recorded last year during the same period.

Referring to the coast, First National Bank’s research analyst Josephat Nambashu advised in the latest FNB Housing Index that property prices there continue accelerating in contrast to the rest of the country, ascending from 2.9 percent growth to 19.1 percent growth over the past 12 months.

“The coastal region’s strong price increase is revealed in Swakopmund and Walvis Bay, with property prices increasing 28.6 percent and 23.4 percent respectively, taking the growth for the region to 19.1 percent for the past 12 months. This saw Swakopmund property prices increase to N$1.2 million while Walvis Bay property prices increased to
N$940 000. The solid growth in the coastal area prices has been driven by its three main towns (Henties Bay, Swakopmund and Walvis Bay), with median prices ranging within the N$1 million to N$1.3 million range for the respective towns. It is however worth noting that the growth was on the back of declining volumes, which contracted by 9.6 percent,” Nambashu noted.

In the southern region, Keetmanshoop prices contracted by over a quarter compared to last year’s medium value to

N$557 000 for the past three months while Lüderitz, in comparison to the same period last year, increased by 4.1 percent year-on-year to N$470 000.

“Volumes for the region, however, remain very poor, with only one transaction recorded for the analysis – therefore results should be interpreted with utmost caution,” Nambashu advised.

“Despite the landscape of political and economic uncertainty in 2016, average house prices around the world rose at their fastest rate in almost three years,” according to the latest Global Knight Frank Price index report.

Accordingly, house prices around the world increased by six percent on average in 2016, up from 4.1 percent in 2015, the highest annual rate recorded in two years.
More importantly, only seven of 55 economies experienced negative house price movements.

“Using the same methodology would place Namibia just after Lithuania in seventh position. The high house price increases are symptomatic of persistent structural supply challenges that are often addressed with ineffective demand side interventions,” Nambashu said.

The FNB Housing Index is based on bonds registered in the names of natural persons at the Deeds Office and as such excludes all bonds registered in the names of juristic persons such as close corporations, private companies and trusts. In Rehoboth, which has its own Deeds Office, farms, properties over 100 000 square metres and properties in industrial areas are excluded, as these may not always be residential properties.

Outliers below N$100 000 (2007 prices adjusted annually) are also excluded, along with further bonds (second, third, fourth, etc. bonds over the same properties). Exclusions were rigorously tested where possible using existing data. Cash transactions are, too, excluded due to a lack of data. Sectional bonds are expected to be included in the Housing Index in due course to provide a comparable sectional property index.

The index uses bond values as a proxy for house prices since there are no consistent records for house prices in Namibia and FNB cautions that prices in the report should only be used as a general guide to property value.

“These values are aggregated by way of the median value as the central measure of tendency to reduce the effects of the high income inequality. Median house prices are smoothed using a three-month moving average, and then weighted using the 2008 distribution.”

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