FNB Namibia has released the housing index for December 2012 and data through December shows that the FNB House Price Index increased by 3.8% from the previous month after two months of falling house prices.
For 2012, house prices rose 25.3% from 2011 in local currency.
When compared to the Knight Frank Global House Price Index, however, Namibia has the fourth highest annual increase in house prices after house prices have been converted to US Dollars.
Interestingly enough, the upward price pressures came from some of the smaller towns such as Omaruru, Oshikango, Grootfontein and Luderitz.
Namene Kalili, Manager Research and Competitor Intelligence at FNB Namibia said: “Higher disposable income during 2012 supported price movements as household disposable incomes grew by 19% year on year.
New housing stock continued to flow into the market, particularly in Okahandja, Walvis Bay and Windhoek, while land delivery weakened across the country. TIPEEG’s impact on the property market remains minimal as the economy continues to battle perennial supply shortages of serviced land.
Developer activity was back on the increase as 780,300m² of land was mortgaged with a maximum yield potential of 1,800 free standing houses, which brings the annual total to 9,900 possible homes for 2012.”
Regarding central property prices the housing index states that these recovered mildly from the previous month but are quite some distance from the September peak of N$776k.
NHE new housing supply remains responsible for this state of affairs as they continued to supply new housing stock into the lower end of the middle price segment.
This maintained the downward bias to the median house prices.
On coastal process Kalili mentioned that property prices at the coast weakened even further during December, monitored prices fell a further 8% from the previous month.
The rate at which they are falling is much faster than expected, due to an increased supply of new affordable housing stock. Housing supply at the coast has remained elevated for past 9 months and particularly in the lower and upper price segment.
Northern house prices increased by 17% month on month, mainly due to strong price movements in the middle price segment. Volumes in the upper price segment remain highly elevated and are up 117%, which is further increasing the price movements in the northern property market.
Strong upward price pressures were prevalent in Eenhana, Grootfontein, Omaruru, Oshikango and Otjiwarongo.
House prices in the southern property market increased by a further 15%. This was evident across all price segments.
Strong upwards price pressures was evident in Luderitz, where property prices rose 85% from the 2011 median, but with that said the Luderitz growth rate has decelerated over the past 4 months.
Price movements in Mariental and Keetmanshoop were moderate to flat, while Aranos house price continue to battle, falling 33% during 2012.
House prices in this market are erratic due to the limited data points or transactions.
On the international front Kalili revealed that Hong Kong recorded the highest growth in property prices for 2012, where property prices rose 24% and consequently government has doubled stamp on properties over HK$2 million in order to cool down house prices.
He added: “Dubai was in second place, where house prices increased by 19% in 2012.
The Dubai property market was back on the front foot after years of stalled developments, which were resurrected in 2012. It is these opulent futuristic new builds which drove house prices in Dubai.
Kalili went on to compare the FNB House Price Index against the Knight Frank Global House Price Index and when doing so it was revealed that Namibia is ranked in fourth place, with property prices increasing 11% in US Dollar terms. He added: “Local house prices were driven by perennial supply shortages of serviced land, particularly in the crucial lower price segment, while supply in the upper price segment continues to increase.
Rising household incomes helped fuel local house price movements, as gross national disposable income rose 19% in nominal terms.
Government has since reduced stamp duties and transfer cost thresholds to make housing more affordable for the average Namibian.”
In conclusion the FNB housing index mentions that the local housing market continued to battle supply shortages of serviced land throughout 2012.
“By our estimates, 290 vacant stands were mortgaged during the year, which is hardly sufficient to house a growing population whose disposable income is increasing at double digit growth rates. This has widened the gap between supply and demand and hence the 25% increase in property prices. This is the fourth highest growth rate in property prices recorded for 2012 after Hong Kong, Dubai and Brazil. We do not expect significant shift in supply for 2013 given the weak land delivery numbers and the long turnaround times to service land and therefore new housing supply will remain muted in 2013, while house prices continue to increase. But with that said, the medium to long term prospects are a lot more promising given the general increase in developer activity during 2012, which may materialise into new housing developments in 2014 and beyond, he” said. - Contributed by FNB Namibia