Building materials up 32% in six years

THE price of building materials have increased by 32% since 2010, Milner Siboleka, an economist and assistant portfolio manager at First Capital Treasury Solutions, said in a report yesterday.

Notable price increases were observed in building materials like super bricks, whose price surged by 48,7% during the period.

Although the price of cement declined substantially during 2011 and 2012, overall cement prices increased by 25,6% during the period under consideration.

“This translates to an average annual inflation of 5,4% in building materials. Across all towns, the price of land increased by 27% over the same six-year period,” he said.

On the other hand, the market price of houses increased by 97,7%. Siboleka noted that the increase in the market selling price of houses is three times more than the increase in both materials and land costs. On an annual basis, the market selling price of houses increased by 16,3%.

“For a dollar increase in the price of the cost to construct a house, the selling price will increase by three more dollars.”

The report estimates an average income of salaried employees in Namibia at N$88 103. The average salary in 2010 was estimated at N$68 400.

First Capital’s House Building Cost Index increased from 99,5 in October 2015 to 105,3 in October 2016, indicating that the cost of building materials increased by 5,8% in October 2016, compared to the price 12 months ago.

The report said there are no major differences in the cost of building materials by town. However, slight differences are noted, with Swakopmund and Ondangwa offering the cheapest building materials.

Cement and bricks make up 31% of the total cost of building materials of a standard three-bedroom house. The report noted that serviced land is cheaper at Keetmanshoop, while in Windhoek the same area of serviced land sells at a price seven times higher than that of Keetmanshoop.

According to Siboleka, the proportion on input factors is: (Materials 67%, labour 27% and land 6%).

“In a normal situation where the project time is met with no defects on construction, a budget of N$331 534 could be sufficient to construct a standard three-bedroom house at Keetmanshoop. In Windhoek, because of the high land price, it could be higher, but not more than N$414 514,” he explained.

“Materials are cheap, hence no evidence is found that they are major contributors to high house prices,” Siboleka said.

A standard three-bedroom house requires nearly 15 000 bricks and 264 bags of cement (50 kg), among other materials.

“Using average prices of materials by all building suppliers, a total cost of N$228 481 was found to be the average cost of materials needed to satisfy a budget of a standard three-bedroom house of 76 square metres,” he added.

Land is cheapest at Keetmans­hoop, followed by Katima Mulilo. The report said although the average cost of building materials is cheap in Windhoek and Swakopmund, the cost of building a house is N$60 000 more than the cost of building the same house in other parts of the country due to land price differentials which favour other towns, while in Windhoek and at Swakopmund, it remains expensive. On average, a house in Windhoek and Swakopmund combined will cost N$398 404, with 20% of that cost being paid for land, while materials weigh 57%. In other towns other than Windhoek and Keetmanshoop, building a house will average to a total cost of N$334 767, with materials accounting for 68% of the total cost, while land makes up only 5% of the total bill to construct a house.