Buyers Struggle to Afford Properties
(AllAfrica Via Acquire Media NewsEdge) House prices were back on the increase through March after volumes continued to weaken, said Namene Kalili, Manager of Research and Competitor Intelligence at FNB Namibia.
"Over the past two months, volumes have decreased by 71 index points, thus indicating a marked slowdown in mortgage transactions. This has translated in mortgage bonds contracting from 419 transactions in November 2013 to 290 transactions in March 2014. "Although there has been a significant increase in land delivery and developer activity, this has not translated in a corresponding increase in new housing supply for March.
Therefore, property prices will remain stubbornly high as long as volumes remain weak. But we remain confident that volumes will recover during the second and third quarters, but not enough to limit price movements to single digit growth for 2014," said Kalili. Kalili explained that most of the weakness stemmed from the central and coastal markets where transaction volumes came under pressure.
"These two markets have seen substantial increases in property prices over the past year, with property prices up 35 and 61 percent respectively and averaging N$869 000 in the central market and N$791 000 in the coastal market." Kalili said that results for the first quarter indicated that willing and able buyers were dwindling as buyers struggled to afford properties at current market prices. Ninety stands were mortgaged during the month, with 13 mortgaged in the central property market, 30 mortgaged at the coast, 27 mortgaged in the north and the remainder in the south. Developers mortgaged a further 357 700m² of land during March, with a maximum yield potential for 835 free standing homes.
He added that most of the upward price pressure came from the upper price segment, where property prices increased by 35 percent year on year, while volumes in the upper price segment declined by 10 percent. Property prices in the middle price segment increased by 11 percent to end the month at an average price of N$1 221 000. Despite this relatively high price tag, overall volumes grew by 41 percent year on year, which indicates there is demand for properties in this price range. Prices in the lower price segment averaged N$603 000, up 12 percent year on year.
Year to date data shows that Okahandja prices drove central house prices up the most, registering 22 percent year to date price increases, while property prices in Gobabis rose by 2 percent, while contracting by 4 percent in Windhoek. On the coastal front the upward price pressure came from the lower to upper price segments, where property prices increased by 21 and 24 percent. Kalili said: "Year to date data shows that property prices at the coast rose the fastest in Walvis Bay (38 percent) followed by Swakopmund (21 percent), while Henties Bay property prices rose 6 percent."
In the north most of the growth continued to be driven by properties in the upper price segment, with volumes up 75 percent year on year. Oshakati property prices remained elevated for the second consecutive month with an average price of N$1 200 000. Year to date property prices contracted in Eenhana, Grootfontein, Okahao, Oshikango, Usakos and Otjiwarongo. In the south property prices fell 2 percent year on year to end the month at a median price of N$404 000. The year to date data shows that Keetmanshoop property prices rose by 7 percent, Luderitz property prices rose 9 percent, while Mariental property prices rose by 15 percent. Although overall volumes grew by 17 percent year on year, Kalili warned caution must be exercised as the volumes are very thin and thus have high margins of error.
Copyright New Era. Distributed by AllAfrica Global Media (allAfrica.com).
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