Jo-Maré Duddy
25 June 2009
HOUSE prices across Namibia dropped by 17 per cent from March 2008 to March this year as falling interest rates, coupled with an increase in new houses and available land, turned the housing sector into a buyer's market.
The latest FNB Housing Index shows the year-on-year median house price - the price of a house that falls in the middle of the total number of homes for sale in a specific area - dropping from N$350 000 last March to N$290 000 this March.
As a result, the index shed 6,7 percentage points from March 2008 and settled at 90,1 points.
"We find that the house prices are falling across all house sizes, but are more pronounced for small and large houses," FBN Manager for Research and Competitor Intelligence Namene Kalili, compiler of the index, said yesterday.
The price for small houses fell by 12,5 per cent, for medium houses by 5,9 per cent and for large houses by 13,6 per cent.
Kalili said brand new low-cost housing is pulling down median house prices in the small house segment, while oversupply is hurting the medium to large house segment.
Prospective buyers interested in the estimated 1 500 properties currently on the market need to hurry up, though.
Kalili doesn't expect the buyer's market to last for more than three to four months.
"Thereafter we foresee demand outstripping supply as the year progresses and the economy recovers with greater stability in the FNB Housing Index," he said.
Kalili earlier predicted that Namibians will use about N$180 million, or 30 per cent of the N$600 million income tax breather announced by Finance Minister Saara Kuugongelwa-Amadhila in her 2009-10 Budget, to buy houses. This is turning out to be reality, spurred on by the 3,5 percentage point drop in home loan interest rates since last December.
The growth in mortgage advances appears seems to be recovering from its 2008 slump, Kalili said, growing by 10,3 per cent on an annualised basis.
Mortgage loans totalled N$14,6 billion in March.
"The prevailing interest rate regime has started to stimulate consumer appetite for mortgages, unlike South Africa where mortgage announcements continue to decline," he said.
Looking at he housing index for the individual regions, Kalili said the index for the central part Windhoek and Okahandja fell by 6,7 points as a result of small and large houses.
"The house price index for the coast fell by 4,6 points, because of large coastal homes," he said.
Kalili added that the house price index for the north fell by 7,5 points as small and medium houses lost value. In the south, it shed by eight points due to small and medium houses.
"On a more positive note, the lower median house price has lifted demand by 1,2 per cent on an annualised basis in all areas except for the coast," Kalili stated.
"The housing index at the coast fell by 165 basis points primarily due to small and medium size houses, while the housing volume index in the north surged 88,5 basis points as the number of small and medium houses increased by 129 per cent due to the introduction of brand new affordable housing stock," he continued.
Kalili said he expects the index to stabilise at levels that are conducive for good volume growth.
"The introduction of brand new low-cost housing will provide welcome relief to first time home owners in the small house segment and with more houses due for delivery, we expect median house prices in the segment to come down to N$195 000 as the supply mix shift towards the affordable end of the housing market." he said.
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