12 Sep 2013 09:50
WINDHOEK, 12 SEP (NAMPA) - Stable interest rates from banks, coupled with an increased supply of houses, have improved consumer sentiment towards taking on household mortgages.
This is according to the Money and Banking Statistics for July 2013, as issued by Simonis Storm Securities on Thursday.
The statistics indicate that that months figures showed an inkling of future growth in mortgage debt, which grew by 16 per cent year-on-year.
Our view is that overall housing prices may not necessarily have decreased, but rather the sentiment amongst consumers to purchase houses or take out mortgages has improved.
This has fuelled the real estate market, as can be seen with increased construction in the housing sector, it noted.
Instalment credit also grew by 12.1 per cent, which can be explained by the growth in vehicle sales purchases.
According to the analysis on household debt, annualised figures showed that year-on-year growth decreased in July, as compared to June. Julys 12-month growth was 12.5 per cent, down slightly from 12.7 per cent for June.
The total Namibian debt, which comprises domestic and foreign government, corporate and household debt, grew by 0.43 per cent during July to nearly N.dollars 80.98 billion, which represents an annual growth rate of 9.93 per cent, slightly lower than the growth recorded in June of 10.15 per cent.
The current growth may be an indication of the trend reverting to its mean, according to the analysis.
Government also slightly increased the issuance of debt during this period, but the decline in private sector credit extensions painted an overall slow growth in debt.
Private sector credit grew by 14.92 per cent over the past 12 months, slower than the growth recorded in June.
As a percentage of Gross Domestic Product (GDP), total debt has increased marginally to 77.92 per cent.
The Money and Banking Statistics further showed that the total Namibian government debt had stabilised since January 2012, fluctuating between N.dollars 24 billion and N.dollars 26 billion.
Over the 12 months to July 2013, total Government debt grew by 0.61 per cent to N.dollars 25 billion.
Government continues to reduce the proportion of its domestic short-term paper (TBs), but bond issuance is up 21.57 per cent as compared to last year.
In line with our expectations, we see that the month of July showed the first signs of increasing Government debt. We expect the months of August and September to have a better depiction of this activity, especially with bond issuance, it added.
The current notion is that Government spending has had to increase due to the drought. Additionally, with the elections coming up, there could be seasonal adjustments to this effect.
Government debt as a percentage of GDP has also remained fairly constant since July last year, averaging 24.64 per cent on a monthly basis.
Credit extended to the private sector, including corporate and households, grew to N.dollars 55.15 billion in July.
The annual growth in credit extension remains moderate, with growth attributed mainly to mortgages and instalment credit. The 12-month growth in July eased slightly to 14.92 per cent from 15.50 per cent.
All of this was a result of a bigger credit base last year in July.
According to the analysis, corporate debt stood at N.dollars 21.02 billion in July.
This represents a negative growth rate of -0.19 per cent from Junes annual growth figures, but represents an 18.9 per cent growth over the last 12 months.
The 12-month credit extension growth slowed from 30.2 per cent in November 2012 to the current 18.9 per cent.
Despite the drop in the annualised growth figures, we expect business activity to pick up, and companies to take on more debt with the various economic activities taking place, especially in construction, the analysts added.