The general cost of building a standard 3-bedroom house in Namibia has increased by 5.8 percent price since October 2015, First Capital House Building Cost Index for October 2016 indicates.
The Index, authored by Milner Siboleka – an economist and assistant Portfolio Manager at First Capital Treasury Solutions, uses a list of materials that are needed to build a standard 3-bedroom house. The building material prices collected cover a list of construction raw materials identified to satisfy the construction needs of a standard house.
Prices were collected in six different towns of Namibia (Windhoek, Keetmanshoop, Swakopmund, Ondangwa, Rundu and Katima Mulilo) from different building material suppliers depending on the town’s suppliers.
The index that was released this week shows that building material prices have increased considerably between 2010 and 2016 while the average cost of building materials increased by 32 percent between October 2010 and October 2016. Notable price increases were in building materials like super bricks, whose price surged by 48.7 percent between October 2010 and October 2016, the index notes.
“Though the price of cement declined substantially during 2011 and 2012, overall cement prices increased by 25.6 percent between 2010 and 2016.“Given differing prices of building materials in every town and the prices of land, the cost of constructing a house as well differs. Because of cheap land price in Keetmanshoop, building a standard 3-bedroom house in that town will cost N$331 534 while in Windhoek the same size of house with similar specifications will cost N$414 514. The high price to build in Windhoek is influenced mainly by land, which remains expensive relative to the price in other towns,” the index states.
As for building materials, the index states that the prices of cement increased by nearly 5.3 percent in October 2016 compared to the same period last year. “The price increase is not surprising given the cycle, which saw electricity and water price hikes in the country, a situation that increases the cost of production. Cement is manufactured domestically and its price is subject to domestic factors that have an impact on cement production,” the index indicates.
The index further reveals that: “Demand for cement has been strong on account of major construction activities that form part of the mass supply of housing, private investments into building infrastructures by the private and public sector. However, prices could increase but not strong enough in the near future on account of reduced construction activities associated with government budget cuts on infrastructure projects, lower economic activity and high interest rates.”
Sand price increased by 5.6 percent in October 2016 compared to October 2015. “The supply of sand has over the years been constrained due to few suppliers while demand remains strong, especially in towns with frequent construction activities like Windhoek,” the index states.
According to the index, the price of super bricks increased by 5.5 percent in October 2016 compared to the same period last year.
“The price of bricks is influenced by the price of cement and sand as major input materials that are used to produce bricks. The cost of water could also affect the price of bricks,” the index states.
As for electrical goods, prices surged by 5.9 percent on an annual basis in October 2016.“This is not surprising given that Namibia imports such goods and the weak local currency could have increased pressure of importing inflation for electrical goods in Namibia.”