Recently FNB Namibia showed that the House Price Index increased by a staggering 12 percent year-on-year in rental inflation.
This cycle was driven by the drastic shortage of property for those considering buying property for the first time, said Namene Kalili, manager of research and competitor intelligence at FNB Namibia.
“Volumes remained weak due to thin volumes recorded in the central market, where persistent under-delivery of entry-level housing continues to send central house prices through the roof and thus depresses volumes nationwide.” said Kalili
The average price for a small house in central Namibia currently stands at N$260 333, while the same property would be priced at N$288 333 for coastal areas. For the Northern and Southern areas the prices would be between N$269 917 and N$233 925 successively.
Over the past three years the central market has struggled to gain momentum, monthly stock has fell from 160 units to an almost insignificant 90 units a month.
This trend can be seen the most in the lower price segment where volumes have fallen by 20 per cent year-on-year. The lower price segment now accounts for 29 per cent in the Central area while it accounts for close to 60 per cent for the rest of the country.
Kalili added that coastal property prices continued to rise in March, these prices were driven by a strong supply of property in the middle price segment. This segment grew 33 per cent on a month-on-month analysis and 49 per cent year-on-year. Swakopmund and Henties Bay also saw supply numbers decrease.
However the trend is not expected to last very long as the second half of 2011 could see “meaningful improvements.” The market will also be helped along by strong land delivery, especially in the Walvis Bay area.
Although property prices in the North continued to increase despite an increase in volumes by 43 per cent, which suggests that demand will continue to outgrow supply as property prices have begun to accelerate. No where more true than in the lower price segment.
Areas such as Ondangwa and Oshakati did not feature much in the index, while Outapi featured much more than than usual and across all price segments and substantial developer activity in Onethindi. Kalili added that prices for small Northern properties increased by 15 per cent despite volumes increasing by 47 per cent year-on-year. Here Katima, Otjiwarongo, Ongwediva, Outapi and Tsumeb drove the trend.
The same cannot be said for Southern property prices though as the prices continued to plunge as volumes in the small price segment kept on its upward journey, approaching the 190 per cent mark due to strong growth in the Keetmanshoop and Lüderitz property market.
As we approach the end of 2011 the question now is if the property market has lived up to the predicted trend?