Decelerating real house prices
According to Namene Kalili, Manager Research at FNB Namibia, the FNB House Price Index has regained some lost ground through May as the index increased by 3.4% month on month. Overall, house prices moved upwards as a result of the tremendous increase in demanf for large and expensive coastal homes, but in real terms, if this category is excluded, house prices rose slower than inflation. The value of large coastal homes shot up by 86% from the same period last year and it is this shift that led median house prices to increase during May. “However, real house prices continued to increase at a much slower pace than they did last year. Overall volumes increased by 1.2% year on year, despite the substantial surge in large coastal properties traded during the month,”Kalili noted. The housing index also reported that central property prices increased by 8.7% month on month to bring the annualised growth rate to 12.1%.
“The general price trend appears to have bottomed out for now at a median house price of N$692,000. The lower price segment continued to experience downward price pressure, where property prices fell by 6.1% year on year, while mild positive price gains have started creeping back into the upper price segment, said Kalili. The year to date figures shows that house prices contracted in Windhoek, Gobabis and Okahandja. The index states that it is worthwhile to note that volumes had contracted by 10.4% month on month and were down by 11.6% from the same period last year. Supply was particularly thin in the lower price segments, where volumes contracted by 24% from the previous month. Land delivery improved as 8 stands were mortgaged at an average price of N$167/m². Furthermore, 10,000m² of land was mortgaged for the first time by developers, with a maximum yield potential for 23 free standing homes. Therefore the cumulative developer activity for the central market stands at 307,380m² of land with a maximum yield potential of 717 free standing houses – a definite improvement from the prior year. Northern property prices continued on a downward trend, shedding 3.4% of their value from the previous month or 4.9% from the same period last year. Northern house prices fell between 3% and 6% from the previous month across all price segments. The year to date data shows that falling median prices were somehow limited to Oshakati, Omaruru, Otavi and Grootfontein. Southern property prices remained as volatile as always, due to very thin volumes. Monitored house prices fell by 45.2% month on month due to a combination of downward price movements in the lower price segment, where price fell by 31% and a shift in the supply mix towards more low income properties. Kalili emphasised that overall house price moved upwards mainly because of increased demand for large coastal homes. “Despite this shift in the marketing mix, house prices continued to increase at a much slower pace than they did last year. This is largely due to increased volumes traded in the year to date.” He added that volume growth should start to shift to the middle price segment as he believed that the upper price segment was saturated, which would put downward pressure on median house prices for the remainder of 2013.