WINDHOEK - The Government Institutions Pension Fund’s housing scheme is a good initiative in that it will afford many individuals access to housing.

However, the funding gap filled by the scheme is merely the symptom of the poor housing delivery, and experts wonder whether municipalities have sufficient serviced land for the scheme to be effective. The GIPF scheme which caters only for houses in urban areas, since the the Pension Fund Act currently does not have provision for houses in areas outside town lands. First National Bank (FNB) Namibia’s Manager for Research and Competitor Intelligence, Namene Kalili, noted that the Namibian economy has not been able to service enough land to meet the growing population’s housing needs and therefore house prices have increased at one of the fastest rates in the world. “This has made housing more expensive and thus unaffordable for the average man on the street. Therefore the average man on the street can’t afford properties at the current market price and not that there is insufficient end user finance in the market to finance new entrants,” remarked Kalili when approached by New Era. Kalili added that coverage is limited to proclaimed areas, and therefore the GIPF’s housing scheme’s impact is “severely constrained by municipalities’ perennial inability to service enough land to house the urban population.” He continued that the scheme effectively increases those who are willing and able to buy houses in a market with rigid supply. “The real market potential for this scheme lies in the communal areas, where we have seen huge improvements in communal housing quality over the past seven years. All of these new modern housing units were financed through savings and unsecured loans. In fact, more modern houses are built in rural Namibia than urban Namibia, which highlights the poor land delivery in our urban areas. Therefore, such a scheme can accelerate this improvement in communal housing quality and relieve some of the housing demand pressures in the urban areas,” said Kalili. 

During the launch of the GIPF’s scheme last week, the fund’s Chief Executive Officer, David Nuyoma, noted that the Pension Fund Act, in its current form, only makes provision for home loans for houses situated in urban areas and does not cover houses situated in rural or unproclaimed areas. However, GIPF chairperson, Advocate Ellaine Samson noted that “the Pension backed housing loans await the amendment of the Pension Funds Act and Rule amendments currently in the process, which will pave the way for members residing in rural areas to participate.” Jan-Hendrik Conradie, from local stock brokerage firm IJG’s research department said the GIPF’s housing scheme “will have a positive effect on the plight of Namibians to own houses as it allows members to gain access to funds that were previously almost impossible. So, from an economic perspective, this should address the housing backlog in Namibia. However, the Pension Fund Act in its current form only makes provision for home loans for houses situated in urban areas, therefore the success of the scheme depends on the availability of serviced land by the municipalities, which is currently a major cause for concern.” 

Kalili is also of the opinion that the scheme will not have an immediate impact on the number of Namibians who actually own homes. “It merely increases the housing demand from 110 000 units to say 160 000 units, assuming half the civil servants now want to buy houses, without changing the supply dynamics. Namibia’s housing problem lies on the supply side. Therefore more houses are needed to meet the housing needs of the population,” he says. “We also know that housing supply is stubbornly rigid and we have not seen significant increases in housing supply over the past 10 years. So we would expect competition for houses to intensify and push up property prices even higher in the short- to medium-term. This demand side intervention effectively increases demand by an estimated 50 000 units immediately, while the supply of the mass housing scheme would need 5 years to meet the additional demand,” noted Kalili. Kalili also expects house prices to increase over the short- to medium-term, while supply tries to catch up to growing demand. “Assuming municipalities across the country decide to take on this challenge, it would cost roughly N$3 billion to service this land, money which municipalities clearly do not have. We already mentioned in our January house price index that the current housing market is characterized by too much money chasing too few houses. This scheme increases the amount of money even more, so we can expect house prices to continue increasing, unless there is a proportionally larger increase in housing supply,” he said. 

By Edgar Brandt