Housing demand and supply mismatch eases
The latest volume growth finally addresses the mismatch between house supply and demand that has been experienced locally for the past five years.
FNB Namibia’s latest Housing Index, according to the bank’s manager for research and competitor intelligence, Namene Kalili, the volume growth has been fuelled by the increased new house deliveries, thanks to last year’s increased developer activities.
“This has decelerated real house appreciation to decelerate even further over the remainder of the year against continued volume growth. The lack of housing supply that dodged the local economy for the past five years is finally adjusting to housing demand, which may tame house price inflation for the rest of the year,” Kalili says.
Construction figures for the Windhoek property market show new house deliveries increased dramatically from a mere three to 44% over the past year; thus deflating house prices in the capital.
Overall volumes in the central property market increased by 16% year on year but this did not stop developers from bonding a further 292 000 per square metre of land with a maximum yield potential of 680 free standing homes, most which are in Okahandja.
Although Kalili acknowledges the volume growth, he points out land delivery has deteriorated over the years. A total of 23 vacant stands were mortgaged during the month under review at an average price of N$111 per square metre.
According to Kalili, based on the general population size, 450 new houses are required across the country monthly, making the 23 vacant ervens grossly insufficient to accommodate the growing population.
The northern stands [in the period under review] went for N$25 per square metre while the coastal stands mortgaged at an average price of N$127 per square metre.
The land delivery in the northern property market, Kalili adds, is increasing once again at a very attractive price. The land delivery in this market in December recorded six stands mortgaged at N$67 per square metre, which was 6% higher than in November. The coastal property market was the leading supplier with nine stands mortgaged at an average price of N$127 per square metre, which was an increase from just seven stands mortgaged at N$93 per square metre in December 2012. The northern property market also supplied nine vacant stands but at N$25 per square metre.
The central market, on the other hand, mortgaged three vacant stands at an average price of N$191 per square metre, which was 40% lower than the February average.
Developers mortgaged a further 45 400 per square metre of land with a maximum yield potential for 1 000 free standing homes, which is more in line with population growth.
The Bank of Namibia (BoN) data mortgage advances, according to the March Housing Index, also grew by 13.55% year on year. This was mostly brought about by a 20% year on year mortgage increase in the upper price segment.
Mortgage advance growth in the middle to lower price segment, however, declined by eight to 10%, respectively due to low to negative price growth, thus translating into less mortgages flowing into the middle and lower price segments.
This clearly indicates more house developments are being undertaken by higher earners than by the middle and low earners.