WINDHOEK – In the latest housing index by FNB Namibia, based on statistics for the month of July 2014, it is stated that house prices increased by 26 percent year on year to bring the FNB House Price Index to 224.7 index points through July as house prices continued to increase at a much faster pace than the long-term trend over the past seven years.
In a statement released at the end of last week, Namene Kalili, Head Researcher at First National Bank Namibia said there had however been a deceleration in property prices over the near term, with property prices falling 4 percent month on month.
Kalili added: “Although this provided very little price relief, the rest of the property market has begun to track property prices in Windhoek, which have been under price pressure for most parts of 2014. The median house price for July was N$700 000, with property prices averaging N$511 000 in the lower price segment, N$1 213 000 in the middle price segment and N$1 977 000 in the upper price segment.
Property prices in the upper price segment continued to decelerate over the past 5 months, which has begun to spread to the middle price segment.
Volumes continued to struggle, falling by 20 percent year on year and 9 percent month on month.
Although July saw volume weakness across all markets, it was the upper price segment that was hardest hit as volumes fell by 22 percent year on year.
On the subject of land delivery it was mentioned that it weakened to 49 stands mortgaged through July at an average price of N$379/m², which was 4 percent higher than the same period last year.
A further 208 000m² of land was mortgaged by developers, with a maximum potential for 485 free standing homes, which brought the cumulative house delivery potential to 8 435 freestanding homes for 2014.
However, developer activity has not filtered meaningfully into the new housing supply numbers as overall volumes continued to trend downwards.
When looking at property prices Kalili advised that central property prices increased by 19 percent year on year to N$763 000.
“Although property prices continued to increase, the rate of increase is falling on the back of downward price pressure in the upper price segment, which have fallen by 8 percent year on year. The year to date data would suggest that the downward price pressures were in Windhoek, where prices have fallen by 9 percent, whilst rising 2 and 24 percent in Gobabis and Okahandja.”
Coastal property prices increased by 10 percent year on year to a median price of N$878 000, but it was added that they did fall by 8 percent from the previous month and thereby started their seasonal slump a month before expected as property prices averaged N$878 000 through the month.
Northern property prices increased by 25 percent year on year to end the month at a median price of N$534 000 on the back of very high price increases in the upper price segment.
Southern property prices, Kalili added, increased by 234 percent year on year to end the month at a median price of N$814 000, but with 4 properties traded in the month, one could not read too much into this figure.
Housing supply and land delivery remained particularly weak and therefore housing demand is expected to remain high in the short to medium term, with very little evidence of increased supply in the longer term either, he said.
Therefore property prices will remain stubbornly high and end the year ±15 percent higher than the same period last year on the back of above average economic growth, robust consumer demand and stronger mining exports to boost household incomes.