Namibia Economist (Windhoek)

14 December 2012

Namibia: Only True Reflection of Inflation

The FNB House Price Index registered its highest growth in 5 years, to end the month at 176 basis points based on data to the end of August.

Namene Kalili, Manager Research and Competitor Intelligence at FNB Namibia advised that, on average, house prices have increased by 20% since the beginning of 2012.

He said price movement in the central and coastal markets are largely responsible for the accelerating house prices as an increased supply of new properties in the middle to upper price segment pushed up overall prices. "The value index rose by 7.6 basis point through August, but because it came off a relatively low base, it was unable to minimise house price inflation." Central property prices continued to rise as house prices increased by a further 6.5% month on month. This has accelerated the year on year growth of central house prices to 39% in August.

"This is the longest and steepest price escalation in the central market since the beginning of this index. Consumers have noticed the escalating house prices and are jumping into the housing market to cash in on these paper fortunes and it is this flood of new money that is driving house prices to elevated levels," Kalili explained.

The year to date data shows that house prices are increasing in Windhoek, which was virtually flat all year long and is suddenly up by 15% year to date. Okahandja lost some growth momentum during August. Although prices have risen by 28% year to date, month on month growth for August reflected a slower pace than previous months.

Coastal house prices peaked in July and have begun their seasonal decline in August as they fell 2% month on month. Month on month, northern house prices were flat in August, but were up 6.5% year on year. Year to date, house prices were flat on the back of strong volume growth as more developments materialised in the northern market.

Eenhana was at the forefront of the volume growth as affordable land filtered into the index in the form of completed middle to upper housing units. Katima Mulilo was another notable contributor.

House prices in the southern property market remain as erratic as ever due to the very small sample size. For the South, house prices rose 23% month on month and are up 55% year on year. Lüderitz and Mariental continued to post strong growth, but with that said, Mariental property prices have begun to lose some growth momentum of late.

Land delivery continued to move sideways as volumes weakened in the northern market, while increasing in the coastal market. A total of 30 stands were mortgaged during August. The coastal market continued to supply the most stands mortgaged.

Annualised growth in mortgage advances accelerated to 12.5% year on year during August. This is the fastest rate of growth since April 2008. It is the increased housing delivery in the central and coastal markets that is accelerating the growth in mortgage advances.

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