Average cost of houses at N$1,1 million

THE average national housing price in Namibia at the end of December 2019 stood at about N$1,1 million says Frans Uusiku, the market researcher at First National Bank Namibia.

Uusiku said the average price is actually a decrease in housing prices, adding that the measure they use to track housing prices countrywide has shown a decline of 4,7%. This, according to him, is largely reflective of the current economic state.

“The relative deeper contraction witnessed in the fourth quarter continues to point towards demand-side risks emanating from weakening economic conditions, subdued real wage growth and high level of households’ indebtedness,” he said.

He added that the current dynamics in the housing market are largely a manifestation of an “economic story” and demand-side constraints induced by a low growth environment that has dragged on since 2016.

“As a result, growth in disposable income has been under immense pressure, further creating affordability issues in the housing market,” Uusiku explained.

The average price as at December last year stood at N$1,5 million for the central regions, N$1,1 million at the coast, N$833 000 in the north and N$769 000 down south. The central and coastal region prices increased by 3,3% and 8,6% respectively, while the northern and southern regions recorded a drop in prices of 0,1% and 8,6% respectively.

Explaining the decrease, Uusiku said, it is evident in the shift in activity towards the small segment across the four regions, although this trend is also seen to be slowly dissipating as economic hurdles linger.

While we believe the decision by the Bank of Namibia to reduce the repo rate from 6,5% to 6,25% and the resultant adjustments by commercial banks is a welcome development to support domestic growth, Uusiku believes the pass-through effects of the reduced interest rates may be minimal to the already indebted households.

Looking forward, the FNB researcher said reviving demand in the residential property market may require a structural shift in the extent of land delivery for housing and this will bring about a new state of equilibrium that responds tothe purchasing power of the economy.

Email: lazarus@namibian.com.na

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