Property stays in the market for four months
PROPERTY prices continued contracting aggressively across the country towards the end of 2018, according to the latest FNB Housing index for February 2019.
Daniel Kavishe, FirstRand Namibia Group Economist advised that since the late nineties, property prices had grown by an average of 11.0% annually as the economy evolved, businesses flourished, and disposable income increased.
“The steady GDP annual growth rate of about 4.0% over that period created ample demand that buoyed residential property prices. However, the deep recession experienced over the past two years has put severe strain on the sector,” Kavishe explained.
He goes on to say that activity has been centralised in the “small” segment (property prices that range between N$0,5 mn to N$1,5 mn), where volumes have picked up by a massive 52.0% y/y at the end of the year.
The analyst further explained that current trends indicate that price pressures still exist in the high-medium to luxury segment, which will undoubtedly lead to lower national average prices over the course of this year.
“At the moment, nationwide, a single property stays in the market for four months, with most sellers forced to drop their selling price by 12.0% y/y before securing a sale – further signs that the sector remains suppressed, “Kavishe noted.
On a regional level, statistics show that central property prices contracted by 2.3% y/y (year on year), while coastal prices edged even lower to -13.9%y/y over the past year. At the coast, property prices contracted by 10.4%, to bring the average house price to N$970k.
Kavishe said that as the latent impact of new property influences the market, price pressures are expected to continue across coastal towns.
Overall, 2019 will most likely be a tough year for pricing in the property market.
“New developments in the low-cost market will possibly take centre stage, dragging average house prices down. Then there is the advancement in technology which means that the supply of alternative building methods will likely also reverberate across the country given the need that exists for basic shelter. Furthermore, with price pressures continuing due to higher unemployment and a weaker disposable income outlook, we believe that property prices will continue decelerating during this year and will likely only normalise in 2020”, concluded Kavish.