Domestic housing market shows early signs of recovery – analyst
The housing bubble continues to deflate with a local analyst expecting prices to contract further by 5.8% this year and another 1.2% next year. The national average house price has also declined to N$1.2 million.
But there are tentative signs of a recovery with mortgage applications ticking up recently, the first such positive move in ten months.
According to FNB Analyst, Josephat Nambashu, the protracted stagnant economic growth and disappearing consumer confidence, resulted in a gradual decrease in house prices.
Nambashu said that due to the recent fall in cement prices, there is encouragement for developers to take advantage of the lower input costs, thus bringing down house prices further.
He said that land delivery accelerated by 43% on average in the first half of 2018, surpassing the 33% average for 2017.
The analyst explained that while the 43% increase in land delivery is good news to those in the housing backlog, the weak labour market and sluggish wage growth have dampened demand for housing.
“Despite recent price developments, which we believe are premature, we kept our forecasts, for house prices to contract by 5.8% for 2018 and a further 1.2% in 2019,” Nambashu said.
Furthermore, he stressed that given that the property market has lagged economic growth by 18 months, there is still expectation that deflationary pressures will continue to persist until the end of 2019.
Nambashu said that although house prices increased by 0.8% in June, overall property prices remain under pressure after a series of annual falls over the last nine months, to bring the average house price to just over N$1.2 million.
“The continued drop in the economy and the increased costs of living on the back of fuel increases remain a stark reminder that consumer spending remains under pressure, which is consequently depressing domestic property prices,” he noted.