National average rent price increases by 3.6%
The national average rent price went up annually by 3.6% to N$6 992 per month, the FNB Rental Index of December 2019 indicates.
The index shows average monthly rental prices for a 1-bedroom unit and for a more than 3-bedrooms unit, which accounts for 39.4% and 3.3% of rental transactions, continue to decelerate in the fourth quarter of 2019, reaching N$3 390 and N$15 034, respectively.
In contrast, the 2-3-bedroom segments have once again gained traction with the monthly average rent recorded at N$7,000 and N$10,251 in the fourth quarter of 2019. This is marginally higher than the N$6,717 and N$ 9,612 recorded in the same quarter of 2018, respectively.
On a quarterly basis, Swakopmund recorded the highest rental prices in the fourth quarter of 2019, with the average rent recorded at N$9 274 per month, while Windhoek is the second highest with respect to rental prices, with an average rent of N$6 545 per month, and reflecting a contraction of 2.5%.
Furthermore, the annual contraction in rental prices in the fourth quarter of 2019 was witnessed across other major populated towns such as Ondangwa (-34.7%), Rundu (-22.4%), Ongwediva (-17.1%) with an exception of Oshakati, which saw growth of 6.7%.
Frans Uusiku, FirstRand Namibia Market Research Manager said the rebound in rental prices since May 2018 has continued its upward trajectory, although growth remains in negative territory.
“The notable growth in rental activity for the 2-3-bedroom segments and the resultant price pressures is indicative of an increase in demand for these type of rental units as houses become unaffordable on the back of subdued real wage growth. Nonetheless, the price to rent ratio of “13” means that the national average house price is 13 times the national average rent that could be earned per annum on a residential property,” Uusiku explained.
Uusiku said based on this, the Namibian housing market is still in a stable state and could improve further along with the expected improvement in economic conditions.
“We therefore expect rental prices growth to mark a positive territory in the first quarter of 2020 before it stabilizes along its long-term sustainable growth path” Uusiku added.