Is Namibia’s Housing Crisis a Result of Capitalism?

What is capitalism? Capitalism is an economic system which emphasises private ownership, market-driven allocation of resources and profit maximisation.

In capitalist societies, housing is often treated as a commodity, rather than a basic human need. The housing market operates based on supply and demand, with prices determined by market forces.

Namibia is facing a housing crisis particularly in the country’s urban areas. According to the Shack Dwellers Federation of Namibia, in 2018 it was estimated that Namibia had a housing backlog of about 500 000
units, with Windhoek alone having a backlog of about 85 000 units.

A study by the Integrated Land Management Institute (ILMI) highlights that 90% of Namibian households are not able to qualify for a mortgage from any commercial bank.

This lack of eligibility is due to several factors, such as income inequality, high unemployment, low average income, and the exorbitant cost of housing.

This has increased the demand for low cost housing, which property developers tend to focus on less because the poor and the unemployed are effectively excluded from the housing finance market.

SUPPLY AND DEMAND

How does capitalism contribute to a housing crisis?

In a capitalist market, prices are determined by supply and demand.

This means that if supply is higher than demand, the price will be lower, and if supply is lower while demand is high, the price increases.

So, in the Namibian context, demand is greater than supply.

This has resulted in unreasonable increases in housing prices.

Personally, I believe unaffordable housing in Namibia is a common consequence of capitalism, especially in urban areas such as Windhoek.

In a capitalist market, as cities grow, housing prices rise because of the high demand, making it difficult for working and middle-class individuals to afford homes or rentals.

The housing sector’s inflationary growth has made it increasingly difficult for ordinary people to find affordable housing.

In short, as cities grow, housing becomes scarcer and more expensive.

The pursuit of profit by landlords, developers, and investors, as well as the increased demand for houses, has led to inflated housing and property prices, pushing many people out of the market.

ECONOMIC EXCLUSION

In 2017, Namibia was rated the second most unequal country in the world on the World Bank Gini Index.

In 2016, nearly 90% of households earned less than N$2 700 a month, making them ineligible for a bank mortgage for an average priced house.

The poor are excluded from the mortgage market and financing options are limited for those who need affordable housing.

With the Namibian population now put at 3 022 401 people, the question of land and housing becomes even more pressing.

Despite government interventions such as the Mass Housing Development Programme, Land Servicing and Allocation, public-private partnerships, Upgrading Informal Settlement and Legislation and Policy Reform, the government – through local authorities and municipalities –have failed to make a significant impact.

One could even say that at this stage the housing crisis in Namibia is bordering on becoming a humanitarian crisis.

BURNING ISSUES

The lack of urban housing has become one of the key political, economic and social issues of our age, with some activists leading protests demanding land and NHE housing occupation.

In Namibia, the land and housing issues have given birth to two political parties, namely the Landless People’s Movement (LPM) and Affirmative Repositioning (AR).

This means that if land and housing distribution are not handled with care, it could prove to be a distractive force.

Shacks in informal settlements are growing at an unprecedented rate and many local authorities and municipalities are struggling to keep up with this challenge.

As a result, a number of key questions need to be answered: Will the government control the housing market or will it remain in the hands of a few?

And what happened to the ‘rent control bill’? Are landlords, developers and investors lobbying the government to keep it at bay?

In summary, while capitalism itself doesn’t inherently cause greed, the pursuit of profit within capitalist systems can lead to a housing crisis and high rental prices.

Addressing these challenges requires comprehensive policies that tackle structural issues (lack of regulation, dwindling public housing and advantageous mortgage policies favouring second homeownership), and prioritising housing as a fundamental right.

• Zeckson Paulus is a teacher with an interest in public management, political, social and economic issues.