Expert bullish on growth in house prices
FNB Market Researcher, Frans Uusiku remains optimistic about further growth in house prices on the back of the unabated housing backlog.
Uusiku said this after the FNB House Price Index recorded a 12-month average growth of 0.7% as at September, the first time in nearly three years that the index marks a growth territory.
He said the housing market has been much more resilient than what many analysts predicted at the outset of the pandemic.
“The rebound in house prices further affirms our earlier view, as highlighted in the prior quarterly publication, that house price deceleration has seemingly reached a pinnacle. This brings the national weighted average house price to N$1,233,106 as at September 2020,” Uusiku said.
According to him, the change in political leadership at the City of Windhoek is also poised to bring about a renewed momentum towards executing on the promise of accessible and affordable land delivery.
“This is particularly true for the low and ultra-low-income households. Looking ahead, the current market dynamics will likely continue to be shaped by the desire for more residential outdoor space and by a move to relocate to smaller towns as the culture of remote working gains prominence” concludes Uusiku.
The increase in house prices has been partly fuelled by the completion of new developments in the central area. Moreover, the persistently strong demand for residential land in smaller towns might have also contributed to the sudden rebound in house prices. This is particularly true for the southern and northern regions where land appears to be relatively affordable.
As a result of these developments, land prices in the southern region grew by 41.9% as at September 2020 compared to a contraction of 27.3% recorded a year ago. The central, coastal and southern regions on the other end recorded contractions in land prices of 41.2%, 55.2% and 8%, respectively over the reviewed period.
“This is unsurprising, given the overwhelming dominance of first-time buyers in the market. All and above, overall demand for housing remains highly concentrated in the small and medium market segments with growth in volumes traded recorded at 11.6% and 33.4% y/y, respectively,” Uusiku said.