Property prices outlook looks bleak -expert
The outlook for property prices in the country looks bleak from a market perspective as widespread job losses and income uncertainty induced by Covid-19 do not bode well for demand.
This is according to Frans Uusiku, FNB Market Researcher, who explains that although data collected up to the end of March 2020 is unlikely to reflect the economic impact of Covid-19, second quarter activity will likely print lower home sales figures, which may exert further downward pressure on price growth.
“This is because of sales cancellations experienced due to lockdown and subsequent closure of the Deeds Office in April. Furthermore, the notable improvement in land delivery for housing is poised to keep residential property prices at bay as potential new house owners sees a penetrative market opportunity through purchasing of land,” Uusiku said.
The latest FNB House Price Index indicates a massive contraction of 5.9% at the end of March 2020 compared to a contraction of 1.5% recorded over the same period in 2019, bringing the average national house price to a 5-year record low of N$1 038 577 at March.
Although overall house prices in the central and coastal regions have remained buoyant, registering growth of 8.2% and 7.2% over the first quarter respectively, it was overshadowed by steep contractions of 18.7% and 13.6% recorded in the northern and southern regions respectively.
House price contractions in the northern and southern regions were observed in the small housing segment, while the small and medium housing segments were responsible for price growth in the central and coastal regions.
“While we continue to view affordability of houses in the large and luxury segments as a stumbling issue, we see deferment in buying decisions in anticipation of a further drop in prices and an improvement in the delivery of land as some of the themes shaping the outlook for the residential property market,” Uusiku said.
Caption: Frans Uusiku, FNB Namibia’s Market Researcher.