Supply remains weak says FNB Namibia’s Kalili
“House prices increased by 2.6% month on month to bring the FNB House Price Index to 203.7 index points through April and thus house price in Namibia have doubled since January 2007, while housing supply has increased by a mere 25% over the same period.” So says Namene Kalili, Manager Research and Competitor Intelligence at FNB Namibia Holdings Ltd.
He went on to say that for the month of April, house price rose 31% from the same time last year as house price increased from N$573k to the current level of N$742k. Therefore households needed to earn at least N$23,000 per month to afford an average house in a country where the average household earned N$7,500 per month. “Buyers thus continue to struggle to afford properties at these prices. Property prices were aggravated by supply imbalances, whereby properties in the lower price segment remained in short supply, while over supplied in the upper price segments. Although land delivery is on the increase, up to 100 units through April, it remains well below household growth rates and therefore lags behind housing demand growth.”
The FNB Housing index stated that central property prices increased by 22% year on year to close the month at median price of N$800k. The upward price pressure came from the middle to upper price segments, where property prices increased by 18 and 31 percent. Therefore properties in the middle price segment averaged N$1.3m, while properties in the upper price segment averaged N$2.6m. Coastal property prices increased by 62% year on year to end the month at a median price of N$893k. Coastal properties were over N$100,000 more expensive than the previous month. This was due to a huge volume increase in the middle price segment, while volumes contracted in the lower price segment. This effectively shifted the median price to the right causing this 62% year on year increase. Northern property prices increased by 24% year on year to N$515k and thereby extend its steep growth trajectory to eight consecutive months. Most of the growth came from the middle price segment, where property prices increased by 19% year on year. Although house prices in the upper price segment decreased by 5%, this coincided with a 100% increase in volumes and therefore indicating that there is still demand for high income properties even at an average price of N2.8m. Southern property prices increased by 12% year on year to end the month at a median price of N$435k. This was due to increasing property prices in Keetmanshoop and Mariental, where property prices rose by 6% and 14%, whilst contracting by 9% in Luderitz.
Kalili in his report concluded that house prices continued to increase on the back of weak supply. “The economy continues to struggle to supply enough new houses for the growing urban population. Therefore demand continues to outstrip supply resulting in increasing property prices. There has, however, been an increase in land delivery, but at 100 stands, it is hardly sufficient to house the growing urban population. Developer activity on the other hand is encouraging, but this is not translating in substantial increase in the new housing supply. As long as housing remains in short supply and the housing backlog continues to increase, we expect consumers to remain desperate for housing and in so doing continue to push up property prices even higher. But we remain confident that volumes will recover during the second and third quarters, but not enough to limit price movements to single digit growth for 2014.”
For more information please contact Vicky Muranda, Manager: Corporate Communications at FNB Holdings on telephone: (+264 61) 299 2944. firstname.lastname@example.org