House prices gallop at a brisk pace
The FNB House Price Index is based on the median house price from Deeds Office data., based on bonds registered for natural persons.
The third quarter of 2015 saw favourable volumes seeping into the market as new residential property reach completion. On a quarterly basis, the price index advanced 22%, supported mainly by price growth during September. The volume index growth edged higher than 12% which is the fastest quarterly growth since 2013. Current growth in prices stems from the Windhoek area albeit growth in volumes seems to be a result of transactions within the towns of Swakopmund and Walvis Bay. Northern towns have further drawn attraction with prices in the region edging 21.5% higher and volumes increasing by 10.1%.
Central Property prices continue to climb
At the end of the third quarter we found that central property prices grew substantially with data from Windhoek indicating a 27% growth in median prices while prices in the Okahandja area grew by 13.8%. In Gobabis, property prices grew by 16.3% while number of transactions tripled in that area. In Windhoek, prices in Academia increased by 76% pushing median prices to N$1.9million. In Cimbebasia median prices have increased to N$1.6 million but offer better value for money based on the average stand size of 341sqm compared to central Windhoek. Overall Volumes in the central region have increased by 15% for the quarter with most transactions emanating from Katutura, Otjomuise and Khomasdal. Dorado Park prices and volumes have improved drastically from the first two quarters of 2015.
Coastal property volumes
Coastal volumes have shown substantial increase in the third quarter with 12% increase across the three major towns. Median prices have increased with 11% for the quarter recording N$975,000 at the end of September.
Transactions for the top end of the market are down 38% quarter on quarter with median price currently at N$2.5mn possibly linked to slowdown in tourist activity that was experienced in 2015. Swakopmund recorded the highest quarterly growth volumes 56% due to increased economic activity and new property developments. Prices in Swakopmund are up 23% while in Walvis Bay and Henties Bay the growth was recorded at 13% and 6% respectively.
Northern towns housing index 22% up
Prices of houses in the Northern regions recorded an overall growth of 22% quarter on quarter as areas like Ongwediva and Tsumeb record significant transactions during the quarter. Tsumeb recorded a growth of 30.0% pushing the median price in the area to N$829,000 while in Ongwediva, prices edged jumped by 18%. Median prices within North East Namibia (specifically town areas) are N$640,000 at the end of third quarter but with stand sizes that equate to 564m2 giving more value per sqm of land. Transaction wise, volumes were up 10% for the quarter based on transactions in the following towns: Ondagwa; Otjiwarongo; Tsumeb; Eenhana. Ondangwa recorded 75 transactions for the third quarter making it the fastest growing Northern town.
Southern property a complete dud
Median prices in Keetmanshoop and Luderitz edged to N$700,000 by the end of the third quarter. Most transactions were recorded in Luderitz but with low median prices at N$440,000. The most expensive property was in Keetmashoop valued at N$900,000. The South remains a region with very low transactions and hardly any movement in property prices.
Land delivery recovers
Land delivery continues steadily across coastal and northern Namibia with a 57% increase in new stands during the third quarter. The spike in new stands was mainly a result of coastal developments which have grown sharply since August 2015. In total 258 stands were mortgaged representing a 62.9% improvement for the quarter.
Conclusion
The third quarter received the highest volume in transactions since the third quarter of 2013. This is a positive sign for the market indicating that despite the quick rise in property prices the demand for housing has not eased. We therefore anticipates that fourth quarter numbers will reveal higher volumes and higher prices than initially estimated. We expect average growth in prices for 2015 to be 17% and average volume growth to be 14%. In 2016 and beyond, the main concern will be jolting the supply side in order to cater to new entrants in the market (home owners). In terms of market dynamics, there has been a 44% decline for housing in the medium to upper end in favour of property well under N$1mn over the past year. The shift in demand is not only in the pricing but also in location with a 13% increase in property demanded at the coast and in northern towns versus property in Windhoek. The trend is likely to continue into 2016 unless further measures are taken to address the current structural bottlenecks.
