8 May 2013

Namibia: Nam Housing Among Most Expensive in the World

Windhoek — The increase in Namibian house prices during 2012 was the fourth highest in the world - when the value of increase was converted to US dollars and compared to increases in house prices in Hong Kong, Dubai and Brazil.

Collated figures for 2012 showed that house prices skyrocketed by 25.3 percent from the prices of 2011 in the local currency. However, when benchmarked against the Knight Frank Global House Price Index, with the prices converted into US dollars, the figures indicated that Namibia had the fourth highest annual increase in property prices around the world. Analysts are now cautioning that looking forward, this year is "unlikely to deviate significantly from 2012".

The world recognised Knight Frank Global House Price Index is published quarterly and tracks the performance of mainstream national housing markets around the world, using official statistics. The comparison of Namibian house prices to the Knight Frank index was done by the First National Bank (FNB) Namibia. Namibian property prices increased 11 percent in US dollar terms. In Hong Kong, which occupies the first place, property prices rose 23.6 percent followed by an increase of 19 percent in Dubai, and 13.7 percent in Brazilian property prices.

"Local house prices were driven by perennial supply shortages of serviced land, particularly in the crucial lower price segment, while supply in the upper price segment continues to increase. Rising household incomes helped fuel local house price movements, as gross national disposable income rose 19 percent in nominal terms. Government has since reduced stamp duties and transfer cost thresholds to make housing more affordable for the average Namibian," said Namene Kalili, Manager Research and Competitor Intelligence at FNB Namibia.

The upward price pressures came from some of the smaller towns such as Omaruru, Oshikango, Grootfontein and Lüderitz.

US property prices grew by 7.3 percent, the largest annual rise since 2006, but tight lending is still curbing the speed and strength of the recovery in the US housing market.

The Eurozone remains in recession and it is hardly surprising that European countries languish at the bottom of the Knight Frank Global House Price Index. The mainstream housing markets will depend on economic stimuli, relaxing lending criteria and instilling buyer confidence in the respective housing markets, while Europe remains the main downside risk on global property markets.

Kalili says the local housing market continued to battle supply shortages of serviced land throughout 2012.

Estimates show that 290 vacant stands were mortgaged during the year, which is hardly sufficient to house a growing population whose disposable income is increasing at double-digit growth rates. This has widened the gap between supply and demand and hence the 25 percent increase in property prices.

"We do not expect a significant shift in supply for 2013 given the weak land delivery numbers and the long turnaround times to service land and therefore new housing supply will remain muted in 2013, while house prices continue to increase. But with that said, the medium to long-term prospects are a lot more promising given the general increase in developer activity during 2012, which may materialise into new housing developments in 2014 and beyond," according to Kalili.

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