Environment providing a good buying opportunity
Long run negative impacts of the pandemic are expected to keep disposable incomes suppressed and unemployment elevated.
23 September 2021 | Economics
We remain cautiously negative on the property market in Namibia. Thein Klein, Economist: Simonis Storm
Despite interest rates being at record lows and providing a good buying opportunity, economic challenges faced by consumers and low confidence in future economic prospects will weigh on a meaningful recovery in the property market.
The First National Bank (FNB) house price index indicated that there was an increase in selling of houses that are priced below N$500 000 at the end of June 2021.
According to Theo Klein, economist at Simonis Storm, “we remain cautiously negative on the property market in Namibia. While some data points show a mild recovery, long run negative impacts of the pandemic are expected to keep disposable incomes suppressed and unemployment elevated.”
For the month August 2021, a total of 318 building plans were received by the City of Windhoek (CoW) of which 274 were approved, compared to 223 being approved during July 2021.
Year to date, the CoW has received 2 170 plans and approved 1 704. This leaves a backlog of 466 plans that must still be approved, Klein said.
Furthermore, year to date, 1 112 building projects have been completed. However, this includes plans that were approved in prior years. A total of 166 building projects were completed during August 2021, compared to 36 in July 2021 and 300 in August 2020, down by 44.7% year-on-year, he pointed out.
The 166 projects completed in August 2021 had a value of N$71 327 396, with housing projects valued at N$51 216 853, additions at N$17 180 543 and walls at N$2,930,000, whereas 300 projects were completed in August 2020 with a total value of N$398 258 693.
The value of approved plans in August 2021 was higher in middle- to low-income neighbourhoods in Windhoek. Nedbank’s new local head office complex is currently the highest valued building project in Central Windhoek, with a contract amount of N$385 million, and is expected to be completed by November 2021. CoW auctioned 231 residential plots during 2020 in Rocky Crest that could add to the higher valuations in plans approved in the area. We do also know of ongoing construction taking place at the Hilltop Village development in Kleine Kuppe, he said.
Year to date, the value of plans approved is below the value of building projects completed. On average, about N$91 million of value per month still needs to be unlocked, Klein added.
A total of 64 plans were approved during August 2021 in Swakopmund with a value of N$45 240 859, compared to 37 plans passed in July 2021, whereas plans approved in July 2021 were only for residential properties.
Of the 64 plans, 62 were in the residential segment, mainly for new buildings, at a value of N$41 688 499. The remining 2 plans were in the commercial segment, also mainly for new buildings, at a value of N$3 552 360, Klein said.
Regarding building projects completed, 26 new residential and one new commercial property building projects were completed during August 2021, whereas four residential and one commercial property additions and alterations projects were completed. The 32 completed projects totalled N$21 697 469 in value during August 2021. Only 12 residential property projects were completed during July 2021.
Home sales in the medium housing segment at the coast have returned to pre-pandemic levels according to FNB’s house price Index, recording a 55.2% year-on-year increase in home sales during June 2021. According to FNB, remote working business models is expected to drive further demand for holiday homes at the coast, as certain workers prefer to work remotely whilst being closer to the beach.