The second quarter of 2016 recorded a slight increase in house price growth while volume growth remained muted across the country.
The FNB National Price Index grew by 13.34% quarter-on-quarter, in line with our long-term view for the year. The improvements in the index are mainly seasonal as historic data suggest that property prices generally increase in the second and third quarter of any given year.
Despite the price growth, the overall trend for the first half of the year points towards a softening of housing demand as consumers remain jittery about participating in the property market, and as overall economic growth begins to tighten. The Volume Index growth, which came in 10.95% lower quarter-on-quarter, indicates a weakening consumptive base as rising inflation, rising interest rates and slow income growth impacts spending.
Supply restrictions, however, continue to inhibit price movement which remains elevated across the country. This is corroborated by the latest housing data, which reveal that central Namibia prices have tripled since the second quarter of 2010 while prices along the coastal towns and in northern Namibia have doubled over the same period. On an annual basis, however, the median price printed at N$850 000, 6% higher than prices in 2015. The slower growth rate has been expected as property starts selling below or at valuation in the country.
Central Property Prices Regain Traction
At the end of June, prices in central Namibia increased by 15.63% quarter-on-quarter while volumes declined by 7.38% quarter-on-quarter. The overall median price for the region edged higher to N$1.3 million, supported by rising prices in Okahandja and Windhoek.
In Windhoek, prices increased by 20.73% quarter-on-quarter thus raising the median price to N$1.36 million. The suburbs with the fastest growth in prices are Wanaheda, Elisenheim and Academia, growing by 23%, 16% and 14%, respectively. Okahandja and Gobabis, however, recorded a slower growth rate of 6.09% and 3.45% quarter-on-quarter, respectively. Currently, median price of property in Gobabis is N$1.07m, while in Okahandja it stands at N$873 000. Overall demand seems to be concentrated in the medium segment of the market where volumes have increased by 46.32% quarter-on-quarter. The upper market, however, continues to weaken, with volumes declining by 54% since the second quarter of 2015.
Coastal Property – Volumes Remain Poor
Coastal volume growth remains in negative territory at -36.68% as transaction demand weakens in all segments of the market. Median prices across the three towns were N$1.25mn in Swakopmund, N$841 000 in Walvis Bay, and N$1.1 million in Henties Bay during the second quarter of the year. Prices in Swakopmund have increased substantially, growing by 42.26% quarter-on-quarter as compared to Walvis Bay where prices have grown at a much slower rate of 3.36% quarter-on-quarter. In Swakopmund, the price growth emanates mainly from Extension 10, Extension 15 and the Rossmund area where property prices increased substantially since last year, thus pushing the overall median prices higher.
Northern Property Prices Track Inflation
Prices up north grew by 8.98% at the end of the second quarter, a lower growth rate as compared to the second quarter of 2015 which stood at 21.37%. Volumes grew by 22.81% quarter-on-quarter, reinforcing the North as the fastest growing housing market in Namibia. Specifically, volumes in Grootfontein increased 16.67%, while in Ongwediva and Oshakati, volumes have doubled over the past year. Median prices across Oshakati, Ongwediva and Rundu were recorded as N$544 000, N$823 000 and N$689 000, respectively. The prices, however, have dropped in Oshakati by 21.30%, but in Rundu and Ongwediva prices have increased by 12.55% and 14.35% compared to last year. The northern market remains more affordable in comparison to the central and coastal region, while land delivery has accelerated in response to rising demand. The volume growth in these towns is, therefore, expected to continue and, invariably, prices will be consistent with inflation as low-cost housing supply builds momentum.
Southern Property – Declining Land Prices
Few residential properties changed hands in the southern parts of the country. However, the few that did trade during the second quarter of the year suggest volume growth declining by 16.67% quarter-on-quarter. Consequently, the median price increased to N$755 000 for the quarter, about 1.1% higher than the second quarter of 2015.