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Home / Namibia continues to record fastest growth in house prices in the world
Namibia continues to record fastest growth in house prices in the world
2015-02-05Staff Report 2 By Staff Reporter WINDHOEK - Namene Kalili, Senior Manager Research and Development at FNB Namibia Holdings, yesterday said although house prices in Namibia continued to increase in 2014 at a much faster pace than the long-term trend over the past seven years, demand continued to weaken in a number of regional markets and this was thus indicative that demand could not support elevated house prices or delayed house purchases leading up to the municipal auction in October. “Along with rising interest rates, we foresee continued deceleration in house price inflation for the remainder of the year, towards our 15 percent year-end forecast. However, above average economic growth, robust consumer demand and stronger mining exports may boost household incomes and ensure that property prices will remain elevated,” said Kalili. Kalili also cited the Knight Frank Global House Price Index in his FNB housing index and informed: “This index shows that property prices were muted in the third quarter on the back of even economic growth across the globe. The index lost its growth impetus as property prices in Dubai and much of Asia came under pressure due to supply and demand imbalances. While sales have fallen sharply, a steady stream of new developments are reaching completion, which is pushing down prices globally. Namibia tops the list of global rankings, recording annual price growth of 16.7 percent as the country struggles to meet the growing housing demand despite numerous government interventions to increase new housing supply. Above average economic growth, robust consumer demand and stronger mining exports have boosted household incomes and thus exert upward price pressure in the world’s second least populated country,” he said. In the latest FNB House Price Index, Kalili noted: “After lower than expected second quarter Gross Domestic Product (GDP) growth and a slight improvement in volumes, the FNB House Price Index continued to bounce along the top through September 2014. House prices averaged N$768 000, which is 21 percent higher than the same period last year, as northern and coastal property prices increased during the month. Coastal property prices remained under pressure for the third consecutive month despite unusually high prices in the upper price segment. And although Windhoek property prices remained under pressure leading up to the much anticipated municipal land auction in October last year, the remainder of the towns continued to post varying degrees of positive price growth.” With regard to volumes, Kalili said these moved upwards, but remained well-below pre-financial crisis levels and were certainly not sufficient to meet demand. Furthermore, the volume growth was concentrated in sparsely populated markets, while the populous regions had sluggish growth. Kalili said land delivery fell well short of the demand curve and although developers mortgaged a further 119 600m² of land with a maximum yield potential for 280 free standing homes, this increased developer activity but has not yet translated into meaningful housing supply. Looking at the central property prices, the FNB housing index states that these were back on the increase through September, with prices rising 16.4 percent year-on-year. The year to date data shows that Okahandja drove the price growth, while Gobabis prices were largely flat and Windhoek prices remained under pressure. “Overall volumes continued to contract year-on-year on account of weaker volumes in the middle to upper price segments leading up to the much-anticipated Academia land auction in October while supply in the lower price segment increased marginally,” said the FNB Researcher. At the coast, property prices fell for the third consecutive month as the seasonal slump set in. Prices fell by almost 5.5 percent month-on-month to N$741 000. The decline was most notable in Swakopmund, where prices fell by 6 percent. However, Walvis Bay and Henties Bay property prices remained buoyant and surprisingly higher than Swakopmund prices. Kalili ascribed this mainly to falling demand for large coastal homes, as volumes fell by 25 percent, while demand in the middle price segment continued to decelerate and contracting in the lower price segment. “After eight consecutive months of price increases and prices increase from N$417 000 to N$554 000 in a space of seven months, northern property prices finally contracted by 2.3 percent month-on-month. Prices in the upper price segment came under pressure, contracting by 9 percent, underpinned by falling demand. Middle and lower price segments registered marginal price increases due to weakening demand,” advised Kalili. He added that the year to date data also showed dissipating inflationary pressures in the northern property market as fewer towns posted price growth in excess of 20 percent. “And finally southern property prices fell by four percent month on month to end the month at a median price of N$607 000. Despite this short-term contraction, prices still remain 52 percent higher than last year, with very strong growth in Aranos, Keetmanshoop and Mariental. Luderitz. But with seven properties traded in the month, one can’t read too much into this figure as the margins of error remain high,” he said. 2015-02-05Staff Report 2
