Property prices weakening - FNB
Persistently weak economic growth, rising unemployment and weak household disposable income growth, have begun to weaken property prices in Namibia, a latest Housing Price Index (HPI) by FNB Namibia shows. “For the month of April, the average annual rate of growth has fallen to 7.0% in nominal terms, despite the robust prices growth in the Coastal and Southern regions.
“When adjusted for inﬂation and according to new methodologies, the real house prices fell marginally by 0.8% and have been negative month to month since December 2016,” explains Josephat Nambashu, Market Research Analyst at FNB Namibia. Josephat advises that across the country there were 16 towns with positive growth, while the list of cities with negative growth is increasing against a backdrop of persistently weak economic data.
“While subdued wage growth has likely contributed to the weakening of property prices, there is a general feeling of uncertainty concerning the performance of the market.
“Estate agent perceptions suggest that other macro measures from political and economic instability and substantial supply additions of main apartments are compounding the headwinds in the domestic property market.” Evidently, the search for secure neighbourhoods with adequate amenities inﬂuenced the price dynamics signiﬁcantly in the capital. High-income suburbs such as Klein Windhoek, Academia and Olympia are currently enduring negative price growth, while Auasblick, Eros, Finkenstein and Kleine Kuppe are enjoying abnormally high price appreciation. This divergent trend is typical of a market in transition.
“Given the negative economic data, we do expect the high-income suburbs to trend downwards with more consistency. The middle-income suburbs are a bit more consistent, with prices increasing in the double-digit range, except Academia (-21.6%) and Hochland Park (5.7%).
“The decline in Academia is ascribed to the land that was auctioned in 2014 and as such should not be mistaken for weakening underlying fundamentals. Low-income suburbs showed very divergent trends as well with prices increasing by as much as 24.1% in Okuryangava while falling by as much as 4.5% in Wanaheda. “During economic downturns, we see property prices in the lower income segments strengthening as households downsize, resulting in higher demand for low-income suburbs,” says Josephat.