WINDHOEK – Analysts are crunching numbers in the hope that the figures for the last quarter of last year – up to December – would show a decrease in house prices.
This would be an indication, a good indication, that there is an increase in the supply of mid-priced houses and that speculators are being discouraged by the lower short-term returns on their prices. There were also earlier expectations that the start of government’s mass housing programme would ease the house prices. The deduction is made from the just released FNB Housing Index, based on the figures collated in the third quarter of 2013, along with figures from the same period reported in the Knight Frank Global House Price Index.
“The local housing market remained under pressure as prices deflated during the third quarter, with real house prices contracting though the quarter,” said the report, adding that the expectations are that the prices would show a further decline in the fourth quarter of 2013 “as supply in the middle price segment continues to improve and speculative buying diminishes as short-term returns contract.”
Even though the FNB House Index increased by 2.8 percent month on month in that period, to deliver a yearly nominal increase of 2 percent in nominal terms, the figures still show a decrease when stripped of inflation.
“Stripping out inflation shows that house prices continue to fall in real terms and the pace of decline has increased at a faster pace over the past three months. This was mainly due to downward price pressures in the coastal and central markets’ middle price segment. A change in the mix of properties traded is contributing to this downward pressure in prices,” said Namene Kalili, Manager Research at FNB Namibia. The decline in prices was mainly due to the decrease in prices of properties in the central and coastal property markets’ middle price segment on the back of increased supply of housing units in the coastal property markets lower price segment and the northern property markets’ middle price segment.
“This is in line with our earlier forecasts which based on the upper price segment being saturated and hence supply was expected to move down the property ladder to the middle price segment and hence the lower house prices,” Kalili said.
According to the Knight Frank Global House Price Index, international property prices increased by 4.6 percent in the third quarter, with 69 percent of the monitored housing markets recording positive house price movements and therefore suggesting that global house price markets continued to gain traction during the third quarter on the back of UK and US house market recovery and double digit price growth in key Asian markets.
In Namibia, the prices continued to slip down the global rankings from 40th in the second quarter to 53rd in the third. Local house prices contracted by 6.9 percent on the back of high base effects, keeping in mind Namibian property prices spiked towards the end of 2012, where the country had the 4th highest house price inflation in the world. Since then house prices have contracted over the past year. With European economies dominating the bottom half of the global house price rankings, it is hardly surprising that the FNB Estate Agent Survey shows that the proportion of European buyers continued to increase during the second quarter. South African house prices on the other hand performed a lot better than Namibia, which explains why the FNB Estate Agents Survey shows that the proportion of South African buyers contracted during the third quarter.
By Desie Heita