Namibia: Rent Charges Drop in 2019

RENT prices have dropped as at March 2019, the FNB Namibia rental index has shown.

The index stood at a -5,2% during the review period.

The index released last week captured advertised rent charges, and indicated that growth has been hindered by sluggish economic conditions. This was due to weak disposable income because of the current recession.

As a result, rents fell across several sections with charges for one, two and three-bedroom apartments declining by -1,7%, -4,6% and -5,7% yearly, respectively.

Group economist Daniel Kavishe said charges seem to have declined as early as the first quarter of 2017, with current prices showing that the market is bottoming out.

Meanwhile, a three-bedroom property in affluent areas of Windhoek is being rented for N$10 695 per month, while a two-bedroom property goes for N$7 023 per month. The average rent for a single room unit is currently N$3 620 per month.

Interestingly, three-bedroom apartments/houses were on average more than N$11 000 at the end of 2016, showing mounting pressure in that domain.

The rental index showed that properties with more than three bedrooms averaged N$18 086 per month at the end of March 2019. The calculated rent per room decreased from N$3 783 to N$3 581 over the past year. Meanwhile, the rent per room dropped by -5,3% yearly, compared to -11,6% in June 2018.

Kavishe added that the standard practice of requesting deposits from renters has loosened in the market, and average deposits dropped by 11,8% at the end of March 2019.

"A better indication from the market, however, is the deposit-to-rent ratio, which serves as a good measure of demand at a given time, with the assumption that a higher deposit to rent ratio denotes higher demand. The latest indicator shows that the ratio has tapered to 8,5% yearly, with the highest growth in the series experienced in 2015 when growth was 27,4%," said the economist.

He added: "In terms of investment, rental yields continue to wane amidst both lower rents charged and declining property prices. Under normal instances, declining property prices would push consumers to rent, resulting in higher average rents. However, with disposable income declining, overall prices have muted, resulting in yields dropping to 7,4% yearly at the end of March 2019."

RENT BILL

Kavishe added that the rent bill may be problematic to implement, and may not meet the needs of the current market, specifically given the current economic slowdown.

"Based on current data, rental yields are much lower than the proposed ceiling, which would mean the landlord would have room to push prices higher if the bill is instated in its current form," said the economist.

Trade minister Tjekero Tweya in November 2018 appointed a rent control board "aimed at regulating the rental market, with a view to prevent the current exploitation of tenants by landlords".

The establishment of the rent control board is in accordance with section 2 (2) and 3 (1) of the Rent Ordinance of 1977.

Twenty-five members were appointed to the rent control boards of Oshakati, Oshana region; Rundu in the Kavango East region; Walvis Bay and Swakopmund in Erongo; and Windhoek in the Khomas region.

- charmaine@namibian.com.na; Twitter: @Char_Ngatjiheue.

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