Tonderai Katswara
21 April 2008
Windhoek — THE property marketdoes not look good for anyone wishing to invest in it at the moment, due to the current surging prices, a leading economist has said.
Speaking to journalists on the outlook for the property market on Wednesday, First National Bank Manager: Research Daniel Motinga said, "I would advise you to sit it out. At the moment I suggest rent." Motinga said the current interest rate cycle was slowing demand for the property market as reflected in the FNB Housing Index Report 2007 - there was a major downward trend for the housing market last year.
The report showed that although 2006 was generally good for the property market, 2007 took a dramatic nosedive which has extended into this year. 2007 presented an uncharacteristically tough trading environment to the local residential market. The high interest rate of 2007, with the bank rate ending at 10,50 per cent, had a much greater impact on the demand and supply of residential property than previously anticipated.
The home loan base rate is currently at 15,25 per cent. Motinga said after increasing by 17 per cent between the first quarter of last year, average valuations then dropped by 15 per cent in the preceding months in line with interest rate hikes. Motinga said consumers are stretched financially due to high cost of living, adding that the housing index of 2001, which showed that around 30 per cent of the Namibian population owned structured housing, had shown little movement to this day. "Of course this does not mean that the stock of housing became cheaper between 2006 and 2007. Instead, what should be inferred from the declining indices is that the residents in relatively expensive areas saw limited trading opportunity, and as result did not valuate their properties," Motinga explained in the report. He said however, Windhoek experienced a selling boom in low-cost houses located in areas like Katutura, Khomasdal, Dorado Park and Rocky Crest, but estate agents had headaches in selling houses in plush areas, especially for properties which go for N$1 million and above.
Motinga lamented the flooding in the north and north-eastern parts of the country saying these kind of natural disasters had adverse effects on the property market. Floods heavily affect property development as in the recent cases of Mariental and towns located in the country's northern regions.
With current expectations that the interest rates in both Pretoria and Windhoek will remain more or less at current levels for the better part of 2008, the outlook for first-time buyers is not positive. "However. for those with enough cash, a buying opportunity beckons as interest will start declining towards 2009 if not earlier," said Motinga.
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