
By: Nghiinomenwa Erastus
For those planning to buy a house, the national weighted average house price is now N$1, 29 million, compared to N$1, 04 million seen in the past years.
Commonly, FNB Residential Property Report for the second quarter of 2021, says finished houses entering the market for sale will cost around N$1,3 million around the country at the same time there are those costing less and more available.
On average the situation is even quite different for the central region and coastal areas. In these two regions, a house entering the market will cost N$1,63 million and N$1,58 million, respectively.
Despite the national weighted average price of a house going beyond a million, the willingness to buy is more visible at the houses with the price starting at the N$500 000 mark.
The report has attributed the increase in houses prices to the record-low mortgage rates and shortage of inventory.
The researchers added that the pent-up demand is building up in almost every region of the country.
According to the FNB researcher, Frans Uusiku, the increase in the price of a house mirrors the considerable increase in mortgage sales across the board, with a relatively high growth impact coming through from the medium and large housing segments.
He also highlighted that the housing market is currently in the hands of buyers thereby reinforcing the narrative that Namibia is currently in a buyers’ market
This, he added, makes it a good time to invest in a property or a dream home.
On a three-month basis, the medium and large housing segments contracted by 0,7% and 4,1% annually, and by the end of June 2021, they were going for N$2,15 million and N$4,05 million at the end of June 2021, respectively.
Uusiku said these dynamics reflect the emergence of cyclical forces such as distressed property sales induced by weak economic conditions and affordability issues.
Houses in the small segment around the country were recorded at N$865 000.
Due to substantial demand and the small segment house price, there was growth of about 7,1%.
“This points to the resilience of these segments from a demand and affordability perspective,” explained Uusiku.
He added that a house in the small segment tend to sell quickly, averaging about one to four months on the market, if reasonably priced.
The review of trading activity in the second quarter also paints an uprise of the affordable housing market or selling of houses that are priced below N$500 000.
“Although this market has been dormant in the recent past, the stark reality is that it represents a beacon of hope for the masses in Namibia, as far as accessible housing is concerned,” said Uusiku.
The northern and central regions were responsible for most of the deals/sales concluded in this segment, accounting for 38% and 37%, respectively.
BUILDING ON YOUR OWN
According to FNB analysis, despite house sales volumes picking up, sales of residential plots continue to disappoint after contracting by 21,5% on yearly basis in June 2021.
This is compared to a strong growth of 45,5% y/y recorded over the same period in 2020.
The slowdown in land delivery was fairly distributed across the regions with the southern region recording the deepest contraction of 25,4% followed by the coastal, northern, and central regions, with contractions of 24,8%, 22,6% and 1,64% yearly, respectively.
This highlights the constrained fiscal capacity at local authority levels to finance and subsequently, scaling up the delivery of serviced land.
Using March 2021 prices, as collected by First Capital, construction of a standard three-bedroom house will cost on average N$593,897 in Windhoek, while in Keetmanshoop it will cost N$388,003 due to varying land prices.
Land measuring 375 square metres in Windhoek’s Khomasdal suburb (considered a middle-income suburb) costs 11 times more than the price of land in Keetmanshoop’s middle-income suburb.
The bill of quantity for building materials, according to First Capital, on a three-bedroomed standard house using March 2021 prices recorded a combined average of N$254,302 in Katima Mulilo, Ondangwa, and Rundu.
While the same materials averaged N$252,692 in Keetmanshoop, Windhoek, and Swakopmund representing a variance of N$ 1,610 in the cost of building materials within these two geographic locations.
While the cost of serviced land for an erven measuring 375 square meters is highest in Windhoek and cheapest in Keetmanshoop costing N$19,922 followed by Rundu costing N$29,574.
The same size of land would cost N$225,396 in a middle-class location of Khomasdal in Windhoek making it the most expensive, followed by Swakopmund at N$80,878.
While for the labour costs, in Namibia it exceeds the 35% benchmark, hence First Capital adjusts labour to 40% of the total material costs inclusive of the profit margin for a building contractor.
Using the model of a three-bedroom standard house, with an average bill of quantity of N$253,342 using March 2021 prices, labour is estimated to cost N$101,336.
Labour costs in some towns like Windhoek could slightly be more expensive due to extra workload in the excavation of rock surface ground to make a foundation for construction as compared to the soft surface for foundation excavation in other towns.
ONGOS VALLEY AND SHACK DWELLERS
Recent reports have also indicated that there are certain outliers in terms of housing provision such as the Shack Dwellers Federation of Namibian who build houses for N$55 000 recently for the Twaloloka people.
Building around 43 houses just for N$2,6 million and the houses will not be going for the usual mortgage funding but differently.
While in Windhoek, there is Ongos Valley building houses on the rent to own approach for those who are renting and want to channel their renting money in to house ownership.
The latest First National Bank Rental Index shows that on average a 1-bedroom flat around the country will cost an individual around N$3 624 with some deviations.
The index found that according to the volume of one-bedroom being pushed to the market, many landlords are charging around N$3 624 for a 1-bedroom unit.
The FNB Residential Rental Index for the second quarter which ended in June 2021 shows.
For those seeking to rent 2-bedroom and three-bedroom segments, the property owners are commonly asking N$6 612 and N$9 615, respectively. Email: erastus@thevillager.com.na