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Modest house price growth of 4% in 2017

by Kelvin Chiringa

House prices have increased by a modest 4.0% through the past year and whilst the headline rate is still positive, momentum now looks weaker due to the downwardly growth rates recorded in the second half of the year, according to FNB Namibia’s latest housing index.

According to analyst at FNB Namibia, Josephat Nambashu, this was triggered by mounting pressure on household incomes, which exerted an increasing drag on consumer confidence.

The average property price increased to N$1.1 million in December, slightly higher than this time last year,” states Josephat Nambashu – Analyst at FNB Namibia.

The index further maintains that at the mentioned levels, the housing market remains resilient, in relation to the weak economic backdrop, where the economy continued to shed jobs and disposable income remained weak.

While price gains are decelerating, the volumes have accelerated, Nambashu maintains.

“December is typically a weak month for home sales, but 2017 December saw all regions register robust volume growth for the first time in two years. Overall, transactions were up 16.2%, most likely boosted by increased supply of new housing stock at more affordable pricing. The FNB Estate Agent Survey reveals improved trading activity levels and rising discounts, even though distressed sales picked up,” he said.


In his prediction of the housing outlook for 2018, the analyst said performance will be determined by economic fundamentals.

“Whilst we expect growth to lift moderately, job losses to normalise and interest rates to remain as accommodative as possible, we are, however, of the opinion that the market could see stable or moderate improvement in house price movements through 2018. Our core view is for house price to grow by 5% - 6%, with downside risks in the wake of last year’s recession,” he said.

Meanwhile, central Namibia’s average house price increased by 8.7% through the year to N$1.5 million, well within the 7% - 10% range that prevailed throughout the year.

In the capital, house price inflation index was up 7.7%, more evidence of a weakening property market.

“Here, we see either price growth diminishing or contracting in the upper segments while the opposite is happening in the low-income segments as the market’s dynamics shift. Transactions in the capital were up 10.3% over the year. We believe, however, that property price growth still lags disposable income growth and as such, we expect prices to weaken during the first half of 2018, particularly at the higher end of the property ladder,” said Nambashu.

The coastal property price growth converged to 2.9% to set the average house price at N$1.1 million.

This property market follows the domestic tourism market and as the tourism season winds down, prices normalise in line with our expectations.

According to the FNB estate agency survey, both buy to let and foreign buying have tapered, with both Walvis Bay and Swakopmund property price growths decelerating to 9.8% and 5.6%, respectively.

Both these two coastal giants saw volumes rising by more than 30%, on the back of mass housing and aggressive land delivery.

House price inflation in the North posted a lowly 1.0% increase over the year, with the average price now N$799,000.

Ondangwa property prices increased by a respectable 11.9%, while Grootfontein, Oshikuku, Otjiwarongo and Oshakati property prices increased by 3% – 7% through 2017. House prices fell across Katima Mulilo (-18.4%), Ongwediva (-15.1%) and Rundu (-9.9%) – as supply increased in these three markets to the detriment of the average selling price.

A total of N$1.5bn mortgages was extended to northern towns in 2017, with Tsumeb leading the pack (N$237m) followed by Ondangwa (N$234m) and Eenhana (N$227m).

These three towns have muscled their way into the top six mortgage markets in Namibia.


Like the coastal, southern house price converged to more realistic levels of 5.4% at the end of the year, speaking to the tumultuous 2017 beset by economic frailties. Mariental, however, posted the highest price growth (+29.0%), followed by Keetmanshoop with 2.0% price growth.

Volumes were up 7.5% in the south through December, but still remain a small base and as such it is greatly advised to always treat these price movements with utmost caution as the price movements are extremely volatile.

In conclusion Josephat said that moderate economic growth was expected in 2018.

“However, a forecast of 1.3% real GDP growth for this year is not any significant additional support for the housing market. Therefore, household incomes will remain under pressure and thus consumer and business confidence will remain weak.”

“This will transpire into waning housing demand in the middle to upper price segments. From recent price developments, it is clear that size matters. Smaller will be better as it has been towards the end of 2017, as many aging homeowners downscale and distressed sales fuel smaller property demand. Hopefully mass housing will lift housing supply to the lower end and help manage segment price inflation,” he said.

Rising housing demand in the lower price segment will regrettably not offset the waning demand in the middle to upper price segments and as such the housing market as a whole will remain depressed to an average house price growth rate of about 5.4% in 2018, he added.

“Although macro fundamentals suggest property prices should contract at this stage of the economic cycle, the sheer size of the housing backlog, will likely keep overall property prices in the black,” said the analyst.