Landlords finally on their knees

The FNB Residential Rental Index recorded a negative growth of -2.1% at the end of December 2020, from -0.8% recorded in December 2019.

06 April 2021 | Economics

Landlords are seemingly left with little choice but to curb their expectations when setting their asking price. Frans Uusiku, Market Research Manager: FNB

PHILLEPUS UUSIKU

Due to oversupply of rental properties and more bargaining power possessed by tenants, landlords are forced to settle for less in rental payments for their properties.

The national weighted average rent stood at N$6 747 at the end of December 2020 from N$6 991 in December 2019, a decrease of N$244 or 3.49%.

According to Frans Uusiku, Market Research Manager at FNB, the one-bedroom unit is the only segment that spurred growth in rent prices recording a growth of 4.9% year-on-year to N$3 670 compared to negative growth of from -6.5% recorded a year ago.

On the other hand, affordability within the two-bedroom, three-bedroom and more-than-three- bedrooms units, continues to be on an uphill path, with annual rent prices recording contractions of -2.3%, -5.0% and -3.4% year-year to N$6 882, N$9 728 and N$17 121, respectively, he pointed out.

Walvis Bay continues to bear the brunt of rental contractions, recording a negative growth of -42.2% year-on-year followed by Oshakati, Ondangwa, Rundu, Swakopmund, Okahandja and Windhoek recording -30.9%, -26.8%, -20.2%, -16.7%, -5.8% and -2.1%, respectively.

Conversely, Tsumeb recorded the highest growth in rent prices of 35.8% year-on-year followed by Ongwediva with 15.2% year-on-year over the review period.

Key drivers

Uusiku is of the view that the fundamentals prevailing in rental market are driven by the deteriorating demand for higher-priced properties. This implies that landlords are seemingly left with little choice but to curb their expectations when setting their asking price.

Secondly, many short-term and leisure rental properties moved onto the long-term rental market in 2020, after a sharp decline in tourism activity potentially due to Covid-19 induced travel restrictions.

“Lastly, we are also starting to see a growing interest amongst tenants choosing to take advantage of lower interest rates to buy houses, whilst some are opting to move in with families, mainly due to job losses or reduced income,” he said.

This exit of tenants from the rental market means an additional oversupply of rental properties to the already overstocked pool, thereby exerting further downward pressure on the rental price.

Rental breakdown

Overall, rental advertisement volumes contracted by 43% quarter-on-quarter and by 29% year-on-year to 2878 units in the fourth quarter of 2020.

Of interest to note is the persistent increase in the relative share of advertisement volumes for the two-bedroom segment to 45% in the fourth quarter of 2020 from 38% in the prior quarter and 34% in the corresponding quarter of 2019. This trend mirrors the notion that more and more tenants in the middle age group appear to be exiting the rental market due to preference to acquire own property on the one end and due to affordability issues on the other end.

“This explains the high tenancy turnover and a relative high frequency of rental openings in the two-bedroom segment. As a result, rent prices across the multi-bedroom segments continues to trend in the negative growth territory,” he said.

Similar News

 

Consumers to make peace with food prices

13 hours ago | Economics

PHILLEPUS UUSIKUAnnual meat inflation increased significantly to 13.3% in March this year compared to a rate of 3.3% recorded in March last year, an increase...

Trans-Zambezi railway extension studied

13 hours ago | Economics

Government has commenced with a feasibility study to help determine the viability of developing and extending the Trans-Zambezi railway to link Namibia with other member...

Jobless Kenyans tackle illegal logging

13 hours ago | Economics

Kagondu Njagi - Standing under a thick green canopy in coastal Kenya's Shim Hills, Mohamed Mwaramuno squints at his fellow forest ranger's smartphone.With about a...

SSA to see world's slowest growth in 2021

13 hours ago | Economics

JOHANNESBURG - Sub-Saharan Africa is set to record the slowest economic growth of any world region this year as the continent struggles to bounce back...

Plots handed over to residents

13 hours ago | Economics

OTJIWARONGO – Eighty residents of Otjiwarongo in the Otjozondjupa region on Wednesday received plots where they are expected to build houses through the Build Together...

Smaller municipal budget for Otji

13 hours ago | Economics

The council of the Otjiwarongo municipality on Tuesday approved the local authority’s 2021/22 capital and expenditure budget of more than N$131 million.The council in 2020/21...

Vaccine reluctance contagious in Senegal

13 hours ago | Economics

Malick Rokhy Ba - While people around the world wait impatiently to be vaccinated against Covid-19, an inoculation site in Senegal was empty on a...

Inflation heats up

1 day - 15 April 2021 | Economics

Phillepus UusikuConsumers will have to pay more for the same quantity of goods as the overall annual inflation rate for March 2021 increased to 3.1%...

Credit uptake unresponsive to low rates

1 day - 15 April 2021 | Economics

PHILLEPUS UUSIKUDespite the repo rate being at a historical low of 3.75% to making borrowing attractive, credit uptake by businesses and households remain weak.Private sector...

GIPF increases pension benefits by 3%

1 day - 15 April 2021 | Economics

PHILLEPUS UUSIKUThe Government Institutions Pension Fund (GIPF) announced a 3% pension benefit increase, effective 01 April 2021 for all GIPF pensioners.In the current volatile economic...

Latest News

Somehow intertwined, definitely unveiled

13 hours ago | Others

Natasha Beyeveld Sounds a bit like true love fading away due to dis(ease) versus an abusive relationship crashing into pieces. Sometimes we have a...

Consumers to make peace with...

13 hours ago | Economics

PHILLEPUS UUSIKUAnnual meat inflation increased significantly to 13.3% in March this year compared to a rate of 3.3% recorded in March last year, an increase...

Trans-Zambezi railway extension studied

13 hours ago | Economics

Government has commenced with a feasibility study to help determine the viability of developing and extending the Trans-Zambezi railway to link Namibia with other member...

‘I won’t humiliate ministers’

13 hours ago | Government

STAFF REPORTERWINDHOEKPresident Hage Geingob yesterday said he will not humiliate ministers accused of corruption by firing them, as questions mount against his administration’s preference to...

DJ Omzala falls on hard...

13 hours ago | People

TUYEIMO HAIDULAOSHAKATI Former radio personality DJ Omzala, who graced the NBC airwaves in the 1990s, is a broken man.Off the airwaves, divorced and having had...

High-level panel members land plum...

13 hours ago | Government

OGONE TLHAGEWINDHOEKSeveral of the individuals who served on the High-Level Panel on the Namibian Economy (HLPNE) have been landed cushy government jobs since playing advisor...

Confidently learning and rising

13 hours ago | People

Wetumwene Shikage Elise Abraham started assisting her aunt at a catering company known as “Kitchen LaPeney”. Now she runs her own business.Abraham attended primary...

Muteka sees herself advancing to...

13 hours ago | People

Michelline NawatisesHendrina Muteka is a self-motivated and result-oriented young woman. She grew up in Tsumeb and moved to Windhoek in 2011 to pursue her studies...

A force to be reckoned...

13 hours ago | People

Monique Adams Esther Shikalepo is an administrative assistant in the benefits processing division at the Government Institutions Pension Fund (GIPF). This division is the engine...

Load More