THE FNB Residential Rental Index posted an annual contraction of 3.1% at the end of March 2021, from 0.0% a year earlier.
This brings the national weighted average rent to N$6 686 from N$7 465 recorded in March 2020.
The 1-bedroom, 2-bedroom and 3-bedroom segments saw annual rental contractions of 0.8%, 2.8% and 1.0%, reaching N$$3,641, N$6 687 and N$9 636, respectively. The only segment that showed annual growth in rent prices is the more-than-3-bedrooms unit which registered growth of 0.3% to N$17 169.
“These patterns highlight the widespread affordability issues amongst tenants and increased demand for multi-family renting units to support affordability in these economically challenging times”, says Frans Uusiku, FNB Market Research Manager.
He added that the incoming economic data for the first quarter of 2021 mirrors the deteriorating state of the rental market, with GDP growth recorded at -6.5% from -2.5% in the corresponding quarter of 2020.
“Suffice to say, a derailed economic recovery, which appears to have been prolonged by the third wave of COVID-19, and low vaccination rate is poised to keep the rental market in a “coma” on the back of muted demand.
This would have far-reaching implications for the stability of the financial sector, with potential unfavourable consequences such as depressed property sales, he said.
“While we do not believe we have effectively reached that state yet, some signs are emerging” Uusiku stated.
He further stated the real estate and profession activities are amongst the five sectors that carried through the economy in the first quarter of 2021, realising growth of 4.6% y/y.
This is further supported by a considerable growth in home sales seen over the reviewed period.
Conversely, rent in Tsumeb, Rundu and Ongwediva grew by 35.8%, 31.0% and 20.2% y/y, respectively. These robust growth figures point to a high vacancy rate in the middle market segment across these jurisdictions as affordability issues linger.
“The rental market is an increasingly important pillar for the Namibia property market. However, given the ailing economy and sluggish demand, rent prices are likely to remain muted for the long haul. Meanwhile, the emergence of the multifamily and vacation rental markets appears to have gained prominence particularly in the coastal and central towns”, Uusiku concluded.