House prices over the top
FNB Namibia has released the housing index for December 2012 and data through December shows that the FNB House Price Index increased by 3.8% from the previous month after two months of falling house prices. For 2012, house prices rose 25.3% from 2011 in local currency. When compared to the Knight Frank Global House Price Index, however, Namibia has the fourth highest annual increase in house prices after conversion to US Dollars. (This is the fourth highest growth rate in property prices recorded for 2012 after Hong Kong, Dubai and Brazil) Interestingly enough, the upward price pressures came from some of the smaller towns such as Omaruru, Oshikango, Grootfontein and Lüderitz.
Namene Kalili, Manager Research and Competitor Intelligence at FNB Namibia said: “Higher disposable income during 2012 supported price movements as household disposable incomes grew by 19% year on year. New housing stock continued to flow into the market, particularly in Okahandja, Walvis Bay and Windhoek, while land delivery weakened across the country. TIPEEG’s impact on the property market remains minimal as the economy continues to battle perennial supply shortages of serviced land.”
Regarding central property prices the housing index states that these recovered mildly from the previous month. Kalili said property prices at the coast weakened even further during December as monitored prices fell a further 8% from the previous month, “The rate at which they are falling is much faster than expected, due to an increased supply of new affordable housing stock. Housing supply at the coast has remained elevated for the past 9 months and particularly in the lower and upper price segment.”Northern house prices increased by 17% month on month, mainly due to strong price movements in the middle price segment. Volumes in the upper price segment remain highly elevated and are up 117%, which is further increasing the price movements in the northern property market. Strong upward price pressures were prevalent in Eenhana, Grootfontein, Omaruru, Oshikango and Otjiwarongo. House prices in the southern property market increased by a further 15%. Strong upwards price pressures was evident in Lüderitz, where property prices rose 85% from the 2011 median, but with that said the Lüderitz growth rate has decelerated over the past 4 months. Price movements in Mariental and Keetmanshoop were moderate to flat, while Aranos house price continued to battle, falling 33% during 2012. House prices in this market are erratic due to the limited data points or transactions.
In conclusion the FNB housing index indicates the local housing market continued to battle supply shortages of serviced land throughout 2012. For 2013 Kalili said “We do not expect a significant shift in supply for 2013 given the weak land delivery numbers and the long turnaround times to service land and therefore new housing supply will remain muted in 2013, while house prices continue to increase.”