Guest Contributor | Oct 5, 2021 | 0
House price index shows welcome signs of renewed buying activity (with voice note)
“Although the economy remains in a relatively weak position, the housing market is showing some signs of a return to normal. In fact, buying conditions for houses have improved and are back to where they were about two years ago,” said FNB’s Market Research Manager, Frans Uusiku when releasing the latest FNB House Price index.
The index is up by 9.6% y/y at the end of June 2021, following a contraction of 1% y/y over the same period in 2020. Consequently, the national weighted average house price came in much stronger at close to N$1.3 million compared to just over one million a year ago.
But FNB expects affordability to remain a challenge as incomes have suffered during the protracted lockdowns and banks are unwilling to lend above certain ceilings if it is for property.
On a three-months basis, the medium and large housing segments contracted by 0.7% and 4.1% y/y to N$2,146,000 and N$4,045,000 at the end of June 2021, respectively.
Second quarter statistics also shows increased activity in the affordable segment below N$500,000. This segment has been dormant for a while but has now come to life with sales in the northern and central regions making up three quarters of all activity.
“These trends mirror the considerable increase in mortgage sales across the board – with a relatively high growth impact coming through from the medium and large housing segments. This also reinforces the narrative that Namibia is currently in a buyers’ market, making it a good time to invest in a property or a dream home”, said Uusiku.
These dynamics reflect the emergence of cyclical forces such as distressed property sales induced by weak economic conditions and affordability issues. Indeed, sales of homes within the medium and large housing segments soared by 34.9% and 53.4 y/y over the review period compared to contractions of 20.5% and 1.7% recorded a year earlier.
“On a more positive front, green shoots in house price growth were observed within the small and luxury segments, registering growth of 7.1% and 95.3% y/y, respectively. This points to the resilience of these segments from a demand and affordability perspective. Suffice to say, a house in the small segment tend to sell quick, averaging about 1 to 4 months in the market, if reasonably priced.”
Hear Frans’ comments on the latest movement in the housing market.