Windhoek building plans approval decline by 20.1%
Building plans for Windhoek by the municipality during October 2016 have reportedly declined by 20.1% month-on-month (m-o-m) and by 12.4% year-on-year (y-o-y) to 191, The Villager can reliably inform.
Statistics from the City of Windhoek indicate that the value of the approved building plans amounted to N$138.6 million, down 13.5% m-o-m from N$160.3 million in September 2016.
Additions to existing structures accounted for 65.4% of the number of approved building projects in October 2016.
This category contracted by 25.6% m-o-m to 125 compared to 168 additions recorded in September 2016.
Houses, which is the second biggest component of buildings approved, dropped 10.0% m-o-m to 36 houses approved.
This comes with a contraction of the value for additions by 12.7% m-o-m and 18.8% y-o-y to N$51.1 million in October 2016.
Despite the drop in the number of houses approved, the value grew by 45.9% m-o-m, while recording a positive growth of 43.6% y-o-y to N$69.9 million in October 2016.
Commenting on this decline, Simonis Storm Securities projects a combination of higher inflation, higher interest rates, a slowing economy, pressure on the Fiscus and slowing credit growth as coming in time to lead to a recession in the construction sector and lowering existing home sales.
Pundits project the possible recession to have a spillover effect into 2017 while the Namibian government has to fight tooth and nail for fiscus restoration.
The number of building plans completed declined by 37.2% m-o-m and by 13.0% y-o-y to 27 building projects in October 2016, and additions dropped significantly by 90.3% m-o-m to three projects completed compared to 31 completed in September 2016.
Furthermore, the city of Windhoek statistics states that 23 houses and one commercial building were completed in October 2016 compared to 10 houses and no commercial building completed in the prior month.
Meanwhile, The Villager has it on good standing that the fact that the number of buildings completed continue to see a decline while approval have increased recently is clear indication of a struggling construction sector in Windhoek.
Meanwhile, at the instigation of the Finance Ministry, government has shelved a number of tenders for capital projects until the FY2016/17 budget review in March 2017, while certain priority projects such as the Neckartal Dam have been allocated additional funds.
House prices go up
According to information coming from the FNB housing index for the second quarter of 2016, house prices increased slightly across the entire country, while house prices in the central area increased by 15.6% quarter-on-quarter (q-o-q).
The overall median price for houses increased to N$1.3 million from N$1.1 million in the first quarter of the year.
“In Windhoek house prices increased by 20.7% q-o-q, raising the median price to N$1.4mn. We take note of the fact that there is a large disparity in residential property in the more affluent areas of Windhoek compared to the lower income areas. We also take note that 3Q2016 data has not yet been made available at time of this report. We believe the picture will look different at the next data point,” submitted Simonis Storm.
Inflation remained elevated, putting pressure on the end consumer while furnishing, household equipment and routine maintenance of the house increased by 7.9% (y-o-y) in October 2016 compared to a 2.3% increase in the prior year (see figure 2).
“Furniture and furnishings, household textiles and glassware, tableware and household utensils” sub categories increased by 5.4%, 6.4% and 16.7% compared to -4.1%, 1.9% and 11.6% respectively, recorded in the prior year.
Furthermore, “housing, water, electricity, gas and other fuels” increased by 7.8% in October 2016 compared to 2.8% recorded in the prior year. At the same time the inflation category for food increased by 11.3% in October. Food price inflation is expected to lead to less disposal income available for non-essential spending.