House price growth expected to slow down
Property prices rebounded in the third quarter of 2016 as the FNB National Price Index recorded a 27% increase compared to the same quarter in 2015.
The growth was fuelled by price inflation in the central and coastal areas, as is seasonally expected during the third quarter.
“The movements were largely driven by higher prices in the upper segment - approximately 34% higher across the two regions - and faster-than-expected price inflation in the lower end, approximately 23% higher across the two regions,” says Daniel Kavishe, market research manager at FNB Namibia.
The Volume Index remained in negative territory for the 10th consecutive quarter, at -17% in the third quarter of 2016, as transaction demand staggered across the regions.
The narrative remains the same as the poor volume growth remains consistent with the weakening economy.
At the end of the third quarter the median price stood at N$900 000, 13% higher than prices last year. Notably, the highest median prices were recorded at Henties Bay, Swakopmund and Windhoek, which currently stand at N$1.2 million for the coastal towns and N$1.4 million for Windhoek.
Kavishe added, “We remain cautiously bearish about the property market, despite the price recovery during the third quarter.
The limited supply of stand-alone units has kept the prices elevated across most regions despite demand waning. W
e anticipate further weakness in demand in central Namibia, but improvements across the northern and coastal towns.”
Customers' prospects remain daunting as they wrestle with a higher inflationary environment and a rising interest-rate cycle. Wage growth remains low as business tries to contain costs with a constrained economic backdrop. Most developers in the central area have stated weaker demand caused by both tighter credit control conditions from financiers and a cautious view from consumers.
In the affordable income space, where demand is slated to be the highest, securing financing for the alternative building methods is pivotal in ensuring absorption into the property market.
These structures, once accredited for durability and tested for structural integrity, will add substantial supply to the market and will potentially cause prices to deflate further.
Looking forward, Kavishe estimated “house price growth to taper down to 10% at the end of 2016 with potential upper bound at 13%. The 12-month cumulative growth in volumes remains negative at -20% which poses downside risks to overall market demand which continues to soften.”
STAFF REPORTER
The growth was fuelled by price inflation in the central and coastal areas, as is seasonally expected during the third quarter.
“The movements were largely driven by higher prices in the upper segment - approximately 34% higher across the two regions - and faster-than-expected price inflation in the lower end, approximately 23% higher across the two regions,” says Daniel Kavishe, market research manager at FNB Namibia.
The Volume Index remained in negative territory for the 10th consecutive quarter, at -17% in the third quarter of 2016, as transaction demand staggered across the regions.
The narrative remains the same as the poor volume growth remains consistent with the weakening economy.
At the end of the third quarter the median price stood at N$900 000, 13% higher than prices last year. Notably, the highest median prices were recorded at Henties Bay, Swakopmund and Windhoek, which currently stand at N$1.2 million for the coastal towns and N$1.4 million for Windhoek.
Kavishe added, “We remain cautiously bearish about the property market, despite the price recovery during the third quarter.
The limited supply of stand-alone units has kept the prices elevated across most regions despite demand waning. W
e anticipate further weakness in demand in central Namibia, but improvements across the northern and coastal towns.”
Customers' prospects remain daunting as they wrestle with a higher inflationary environment and a rising interest-rate cycle. Wage growth remains low as business tries to contain costs with a constrained economic backdrop. Most developers in the central area have stated weaker demand caused by both tighter credit control conditions from financiers and a cautious view from consumers.
In the affordable income space, where demand is slated to be the highest, securing financing for the alternative building methods is pivotal in ensuring absorption into the property market.
These structures, once accredited for durability and tested for structural integrity, will add substantial supply to the market and will potentially cause prices to deflate further.
Looking forward, Kavishe estimated “house price growth to taper down to 10% at the end of 2016 with potential upper bound at 13%. The 12-month cumulative growth in volumes remains negative at -20% which poses downside risks to overall market demand which continues to soften.”
STAFF REPORTER
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