Windhoek-With the economy grinding to a lowly 1.1 percent GDP growth last year and still shedding jobs, disposable income is under significant pressure and macroeconomic pressures continue to weigh on the Namibian housing market as annual price growth decelerated to 6.4 percent in June.
This is according to Josephat Nambashu from FNB, who in the latest FNB Housing Index notes a substantial decline from the housing market annual price growth of 11.6 percent recorded a year ago.
“This is even more evident in real price changes (i.e. CPI inflation-adjusted), which has been in the red for the past seven months on the back of upwardly sticky housing inflation, as measured by the Namibia Statistics Agency.
“Hence, housing demand is faltering under this backdrop and it is hardly surprising that properties spend on average 24 weeks on the market and when they eventually do sell 98 percent sell below the original asking price,” Nambashu noted.
That said, he believes housing demand could remain weak and affordability ought to become more challenging against the sombre macro-economic backdrop. This is evident in the volumes traded data, where for the 17th consecutive month, volume growth has remained negative.
June trading volumes came in 6.3 percent lower than the same period last year.
“Hardly surprising, the upper income segment was hardest hit with a 43.4 percent contraction over the same period last year and according to our Q3 Estate Agent Survey, these properties average 27 weeks on the market.
“As it currently stands, the northern property market is the only market that has registered meaningful volume growth in June, while the central and coastal market volumes are contracting rather rapidly, as confirmed by our Q3 Estate Agents Survey.
Similar structural economic weaknesses were evident after the global financial crisis in 2010, and given the current economic backdrop, coupled with limited new developments outside the northern property market, FNB expected trade volumes to remain depressed for the remainder of the year, spilling over to 2018, Nambashu advised.