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Residential property sector continues to bear brunt of elevated prices and interest rate

Residential property sector continues to bear brunt of elevated prices and interest rate

House Price Index registers 1.5% annual growth

Business Reporter

THE House Price Index released by FNB printed a 12-month average growth of 1.5% at the end of Q4-2023, compared to a growth of 3.3% at the end of Q3-2023 and -1.9 at the end of Q4-2022.

According to FNB communications specialist, Hileni Amadhili, a subdued buying activity is aligned to the elevated interest rate and inflation environment which has weighed on consumer health in the context of high levels of indebtedness among households which currently stands at 86.0%.

Amadhila said that the overall national house price The overall national house price now stands at N$1 214 674 during Q4-2023, slightly lower than N$ 1 281 086 in Q3-2023, but higher than N$ 1 96 569 over the corresponding period in 2022. The average prices for the central, coastal, northern and Southern regions stand at 1 550 000, N$ 1 398 000, N$ 884 000 and N$ 881 000 respectively.

Photo: NHE

“This limits the ability for consumers to spend on assets such as housing as the focus is on supplementing disposable income which has come under pressure in the prevailing environment. This view is corroborated by private sector credit extension numbers which show that household mortgage credit grew by 3.0% on 12—month rolling average basis in Q4—2023 compared to unsecured credit which grew by 11.1% over the same period,” Amadhila said.

She added that analysts maintain their view that inflation will moderate but remain sticky, that the repo rate has peaked at 7.75% and the cutting cycle will commence in the latter half of 2024.

“With rising default rates observed, we continue to expect buying activity to remain constrained over the remainder of 2024 and the first half of 2025, as the cutting cycle will be too shallow to induce a significant rebound in the residential property market.

Along with recent LTV regulation adjustments, we note the allocation of N$ 700 million for the upgrading of informal settlements, land servicing and provision for housing allocated in the FY2024/25 budget. Furthermore, the brackets transfer and stamp duties have been adjusted for inflation and the exemption level has been increased from N$600 000 to N$ 1 100 000 to improve access to housing,” Amadhila concluded.

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