High cost of building still impacts middle and low-income earners more
The cost of land and construction remains high and severely impacts the affordability of a basic house. This is particularly problematic for the low and middle-income segments of the housing market.
This warning was issued by Bank Windhoek managing director Baronice Hans at the recent 2016 Bank Windhoek Estate Agent Awards.
Hans warned that although the Namibian economy enjoyed consistent above-five percent growth over the past five years, spurred on by expansionary fiscal policy and surging foreign direct investments, a slowdown was expected.
“While the economy grew by 5.7 percent in 2015, growth is set to slow going forward, constrained by a slowdown in construction activity, a deteriorating fiscal position, an uncertain policy environment, and slowdown in major trading partners, Angola and South Africa,” Hans said.
She noted that the scarcity of serviced land remains a challenge, which has also been highlighted in the Harambee Prosperity Plan under the pillars of Social Progression and Infrastructure Development, whereby thousands of serviced plots should be made available in all towns within the next few years.
“The cost of land and building construction remains very high, which causes affordability of a basic house for the low and middle income segments to be problematic. Initiatives from government, in partnership with the Government Institutions Pension Fund (GIPF), to assist with finance for these expensive services are an example of their commitment towards this objective.
“The property market experienced mixed growth, with a decline in demand in the high-end market with a price range above N$2.6 million, while there is a strong price growth in the middle and lower segment of the market.
However, volume growth in the middle and lower segments remained poor due to high input cost and service delivery,” Hans stated.
“One should also not lose sight of the impact of the severe drought that the country is experiencing on the housing industry as the desperate attempts to save water, threatens to cripple the construction sector,” she added.
She pointed out that the sword of rent control and redistribution of land also hangs over the heads of property developers, owners and estate agents, as the impact of these regulatory measures on the housing industry is as yet unclear.
Two new laws to regulate property ownership, namely the Estate Agents and Property Developer Bill and the Land Bill, are still on the agenda for parliament to discuss before the end of the year.
“Despite all the challenges, I am proud to announce that Bank Windhoek once again achieved an acceptable annual growth. Part of this successful growth was due to the business conducted by our property finance department,” Hans concluded.