Namibia’s property market to remain buoyant

The value of houses in Namibia has increased over 100 percent over the past few years due to the strong macro-economic environment. The positive macroeconomic environment has raised disposable income as a result of lower inflation and interest rates, a prominent economic analyst has said. The coming years should also see the trend continuing, which spells good news for property owners. If one puts one’s money into property, according to Martin Mwinga, of First National Bank (FNB) Manager Asset Management and also economist, one could get better returns compared to other investments. In Windhoek alone, residential properties have gone up by around 100 percent in the past five years, which represents an increase of 20 percent per year. This view was expressed in the First National Bank (FNB) Housing Index launched this week ‘ the first such index in Namibia ‘ which will publish data and trends on the property market every four months. The index was based on valuations by the FNB home-loan department and not on purchase price. The drafters of the index felt that it would be reflective of the complete Namibian situation, as FNB has a sample size of 45 per cent of the property market share. The index used 2001 as a base year. People packed a conference room at the NamPower Convention Centre in Windhoek to listen to a presentation on the FNB Housing Index ‘ on how it was compiled and its findings ‘ delivered by Mwinga, who is also the Portfolio Manager for RMB Asset Management. The FNB Housing Index presented was for quarter four ‘ October to December ‘ of 2005. Attendants heard that the property market was a good investment tool, as statistics revealed that since 2001, there has been an increase in both the demand for and prices of property in all regions of the country. Mwinga said this was likely to continue and there was no bubble burst on the horizon yet. “The housing market is still in its expansionary phase and has not peaked yet. With structural decline in inflation and lower interest rate, the property market remains an excellent investment vehicle,” said Mwinga. The prime lending rate currently stands at 11,75 per cent and is likely to stay at that mark, as the repo rate is expected to remain unchanged at seven per cent this year, as forecast in the latest Reuters Econometer. Mwinga also gave a detailed presentation on how different residential suburbs in Windhoek were performing on the market. The key drivers of the residential property market were outlined as economic cycles, population growth and migration, disposable income and employment, interest rate and inflation. Mwinga said the property market would definitely benefit from expected major infrastructure expenditure by the Government on the back of Vision 2030. The new index contains useful information on all the regions, except the Omaheke Region, and how the property market has been performing in each particular area. An overall analysis of the residential property market from 1993 to last year indicates that the value of houses in Namibia increased by around 100 per cent, while the increase from 2001 to 2005 was about 50 per cent. FNB Group Chief Executive Officer, Vekuii Rukoro said the Housing Index should be the custodian of the National Planning Commission. He said he hoped there would soon be a national housing index to which all the parties involved in the property business would contribute, and which would be made available to the public. “The FNB Housing Index will help customers make informed economic decisions when investing in property,” Rukoro said.

March 2006
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