Huge housing backlog in Windhoek
The government’s latest low-cost housing project in Windhoek will hardly make a dent in the rising demand for housing in the capital.
11 August 2020 | Infrastructure
The housing backlog in Windhoek is about 100 000 units and is rising at 3.5% per year, according to the latest report by First Capital, which monitors housing trends in Namibia.
The report said government has initiated a joint two-year pilot project estimated to cost N$139 million for 1 200 housing units for ultra-low-income earners in Windhoek.
“Currently the housing backlog is estimated in the range of 100 000 in Windhoek, rising at a rate of 3.5% per annum. This project would rarely make a dent in its pilot phase, unless scaled up beyond.
“Put differently, at a rate of 1 200 houses for two years, the housing backlog will continue to rise, albeit at a slightly reduced rate of 3% from 3.5%, without the project intervention,” the report said.
N$522k for a 3-bedroom home
It costs about N$522 320 to build a three-bedroom house in Windhoek, compared to N$332 040 at Keetmanshoop, because of varying land prices, the report said further.
It compared construction costs in Windhoek, Keetmanshoop, Swakopmund, Ondangwa, Rundu and Katima Mulilo for June.
Land measuring 375 square metres in Windhoek’s Khomasdal suburb, which is considered a middle-income area, costs 11 times more than the price of land in Keetmanshoop’s middle-income residential area.
Taking into consideration all costs involved, land accounts for 6% of total cost at Keetmanshoop, while in Windhoek it accounts for 40%.
Most significant cost component
The report found that the cost of building a standard three-bedroom house is around N$390 200 in Swakopmund, and around N$332 040 in towns such as Rundu, Ondangwa and Katima Mulilo.
Building materials remain the most significant cost component in the house construction value chain, on average accounting for 63% of total cost in Keetmanshoop, Rundu, Katima Mulilo and Ondangwa.
On average, the building materials needed for a standard three-bedroom house cost N$215 355 in Katima Mulilo, Ondangwa and Rundu, while the same materials averaged N$213 992 in Keetmanshoop, Windhoek and Swakopmund.
The total cost of building materials in Keetmanshoop is N$1 753 less than in Katima Mulilo.
“The differences in building materials cost by town reflects varying prices due to supply sources that are largely unique to every town.”
The cost of a serviced plot, measuring 375 square metres, is cheapest in Keetmanshoop at N$18 700, followed by Rundu at N$27 900.
The same size of land would cost N$208 700 in a middle-class area such as Khomasdal in Windhoek, making it the most expensive, followed by Swakopmund at N$76 300.
“Though average growth of land prices has declined from the five-year average of 9% to 3% for the year to date, land still remains exorbitantly elevated, especially in Windhoek and coastal towns,” the report said.
It said high prices of land in Windhoek and coastal towns can be explained by higher demand, as opposed to the supply of land in these towns.
Mismatched demand and supply
Furthermore, the rising supply deficit in land servicing and delivery continues to put pressure on prices. Other than the mismatch between demand and supply of land, inefficiencies in servicing, as well as speculative motives among private developers equally contribute to high urban land prices.
The report added that the budget allocation to service land for low-income settlements has declined significantly, from N$1.3 billion in 2018/19 to N$418 million in the current financial year.
Of the N$418 million allocated for urban land servicing countrywide, a combined 6%, or N$24 million, was allocated to cater for land servicing in Windhoek, Walvis Bay and Swakopmund, which accounts for half of the urban population in the country.