Staff Reporter

WINDHOEK - “After enduring some of the highest property price appreciation in the world, the tide has turned, with buyers firmly in the driving seat and dictating terms as increased volumes have provided prospective buyers with much needed options,” says Namene Kalili, FirstRand Namibia Group Economist. 

Resulting in price corrections to 2014 levels in real terms. The latest data shows that the residential property market remained in the red through August, as property prices contracted by 2.9 percent. 

“This means that property prices have contracted in seven of the first eight months of 2018. The Average property price has now moderated N$1.177m, from its March 2017 peak of N$1.246m. Regionally, property prices are falling across the central and coastal regions, with 6.0 percent and 5.0 percent price contractions respectively,” adds Kalili.

The price declines remain concentrated in the luxury segment, where prices have plummeted by 29.4 percent over the past year, which is trickling down into the lower to upper price segments in the form of decelerated price increases. 

Volumes, on the other hand, have picked up 27.8 percent year on year, to levels last seen in 2013. This comes off rather robust volume growth in the lower and middle price segments, as local authorities ramp up affordable housing supply in the northern property market, whilst the incidence of distressed sales accelerates in the central market. 

Despite the robust volume growth, normalised mortgage advances are down 3.7 percent due to N$200 million mortgage advance contraction in the luxury segment, on the back of price and volume contraction. Additionally, mortgage advances to the middle and upper price segments are also contracting, due to volume contraction only. Therefore, the mortgage cake is becoming smaller for the increasing number of mortgage financiers, which translates into more competition, which translates into better terms for consumers. 

With economic growth stagnating, consumer confidence waning, rising interest rates, rising home ownership costs and the economy still shedding jobs, the stage is set for lower housing demand, at a time when land delivery and housing supply is on the increase. Therefore, we expect the market to become oversupplied with properties, providing various purchase opportunities for first time property owners. Under these conditions, the few buyers that are available will be in the driving seat, dictating terms, and resulting in further price corrections. 

“We therefore expect house prices to shed 5.8 percent of their value in 2018, and to start seeing some price resistance in 2019, as housing becomes increasingly affordable to more buyers. This will reduce the price contraction through 2019 to 1.2 percent, before turning positive in 2020, at which stage we believe property prices will have corrected and thus maintain inflation related price increases going forward,” concluded Kalili.