Buyers’ market gaining more traction as average property price moderated to N$1.177 million
Property prices have contracted in seven of the first eight months of 2018 with the average property price moderating to N$1.177 million, from its March 2017 peak of N$1.246 million, according to the latest FNB Housing Index.
Namene Kalili, FirstRand Namibia Group Economist said that regionally, property prices are falling across the central and coastal regions, with 6% and 5% price contractions, respectively.
“After enduring some of the highest property price appreciation in the world, the tide has turned, with buyers firmly in the driving seat and dictating terms as increased volumes have provided prospective buyers with much needed options,” Kalili said.
The index shows that the price declines remain concentrated in the luxury segment, where prices have plummeted by 29.4% over the past year, which is trickling down into the lower to upper price segments in the form of decelerated price increases.
However, the latest data shows that the residential property market remained in the red through August.
Volumes, on the other hand, have picked up 27.8% year on year, to levels last seen in 2013. Kalili stressed that his comes off rather robust volume growth in the lower and middle price segments, as local authorities ramp up affordable housing supply in the northern property market, whilst the incidence of distressed sales accelerates in the central market.
With economic growth stagnating, consumer confidence waning, rising interest rates, rising home ownership costs and the economy still shedding jobs, the stage is set for lower housing demand, at a time when land delivery and housing supply is on the increase.
Therefore, Kalili said they expect the market to become oversupplied with properties, providing various purchase opportunities for first time property owners. He explained that under these conditions, the few buyers that are available will be in the driving seat, dictating terms, and resulting in further price corrections.
“We therefore expect house prices to shed 5.8% of their value in 2018, and to start seeing some price resistance in 2019, as housing becomes increasingly affordable to more buyers. This will reduce the price contraction through 2019 to 1.2%, before turning positive in 2020, at which stage we believe property prices will have corrected and thus maintain inflation related price increases going forward” Kalili added.