By Magreth Nunuhe
WINDHOEK – For the first time in five years, Namibia’s housing prices seem to be persistently gravitating towards normal prices as indicated in the latest Housing Price Index (HPI) released by the First National Bank (FNB), where real house prices have been falling marginally by 0.8 percent and have been negative month on month growth since December 2016.
This is attributed to slower property activity, weak economic growth, rising unemployment and weak household disposable income growth that have started to weaken property prices in Namibia.
According to Josephat Nambashu, market research analyst at FNB Namibia, although the coastal and southern regions had strong prices growth for the past months, the list of towns with negative growth has been increasing incessantly due to a weak economy.
“While subdued wage growth has likely contributed to the weakening of property prices, there is a general feeling of uncertainty concerning the performance of the market in terms of estate agent perceptions – suggesting that other macro measures from political and economic instability and solid supply additions of mainly apartments are compounding the headwinds in the domestic property market,” explained Nambashu.
The FNB House Price Index over a five year period, released last year, showed that Namibia’s property prices have been spiralling out of control, shooting up by a massive 87.8 percent.
Between 2009 and 2015, median house prices for the major towns, such as Windhoek, Walvis Bay, Swakopmund, Henties Bay, Otjiwarongo, Oshakati, Ongwediva and Gobabis increased from R400,000 to R$900,000.
But since 2016, the median price for houses has increased to just around R$1,1 million for the major towns, averaging around 10 percent increase.
The FNB predicts that the trend is expected to reverse in the coming months as prices return to the long-term downward trajectory evident since 2011 but less likely to contract.
“Volumes in the region contracted marginally, indicative of depressed market conditions. Trading activity remains particularly weak and especially for the high income properties. Not only is the trading activity slow, properties are spending more time on the market and in some cases as much as 25 weeks,” says FNB.
Namibia is rated among countries with the highest house price increase in the world with an inefficient land delivery system, limited availability of serviced land and mismatch between supply and demand.
Currently, it is estimated that over half a million people, who constitute more than a quarter of the population are living in shacks in urban areas while the current average house prices in the country is around R800,000, which is unaffordable to the majority 90 percent of the population.
Namibia saw an abrupt increase of urban population from 28 percent in 1990 at independence to 43 percent after independence, which was exacerbated by a slow pace of housing delivery.
The government’s Vision 2030 set a deadline that in the next 15 years (by 2030) Namibians should have access to adequate housing, with water and sanitation facilities for all.
It also states that 3,000 houses need to be built each year to meet the population’s housing needs to deal with an estimated backlog of 80,000 houses.
But the housing market is still not properly regulated with the necessary legal and institutional framework to ensure adequate and affordable home ownership and the situation seem to have taken a downward spiral, as recommendations are yet to be tested or implemented.
In 2011, the Institute for Public Policy Research (IPPR) presented recommendations to government on the housing backlog situation in Namibia to, inter alia, provide serviced land, shorten and simplify the process of acquiring land and scale up the delivery of housing through the Targeted Intervention Programme for Employment and Economic Growth (TIPEEG).
TIPEEG was implemented in April 2011 to create 104,000 direct and indirect jobs as a three-year development initiative concentrating on transport infrastructure, agriculture and the housing sector at an expenditure of R9,1 billion over three years.
The key reason quoted in the IPPR report for the slow pace of housing delivery, is the lack of serviced land available in Namibia and although government was aware of the issue, little has changed over the last twenty years with the process of acquiring land taking years before development can start.
In addition, the IPPR also recommended that before private developers got approval to build houses, they be mandated to reserve 20 percent of their housing development budget towards providing affordable dwellings so that higher-income housing development could cross-subsidise housing for the lower-income segments.