Windhoek's land price headache

Building materials remain the most significant cost component, accounting for 63% of total building costs at Keetmanshoop, Rundu, Katima Mulilo and Ondangwa.

17 March 2020 | Infrastructure

It costs about N$522 393 to build a three-bedroom house in Windhoek, compared to N$331 980 for the same house at Keetmanshoop, because of varying land prices.

Land measuring 375 square metres in Windhoek's Khomasdal suburb, which is considered a middle-income area, costs 11 times more than land in Keetmanshoop's middle-income residential area.

Taking into consideration all costs involved, land accounts for 6% of the total cost at Keetmanshoop, while in Windhoek it accounts for 40%.

This is according to a new report by First Capital, which monitors housing trends in Namibia.

It compared construction costs in Windhoek, Keetmanshoop, Swakopmund, Ondangwa, Rundu and Katima Mulilo in January this year.

The report found that the cost of building a standard three-bedroom house is around N$343 030 in towns such as Rundu, Ondangwa and Katima Mulilo, while the same house can cost N$390 520 at Swakopmund.

Building materials remain the most significant cost component, accounting for 63% of total building costs at Keetmanshoop, Rundu, Katima Mulilo and Ondangwa.

On average, the building materials needed for a standard three-bedroom house cost N$215 700 at Katima Mulilo and N$215 500 at Ondangwa. Keetmanshoop, Windhoek and Swakopmund offer the cheapest building materials at N$213 900, N$214 400 and N$214 600 respectively.

According to the report, the cost of building materials at Keetmanshoop is N$1 750 less than at Katima Mulilo.

“The difference in building material costs by town reflects varying prices due to supply sources that are largely unique to every town. For example, sand, stones, bricks and roofing material prices differ by town,” the report states.

The cost of a serviced plot measuring 375 square metres is the lowest at Keetmanshoop (N$18 500), followed by Rundu (N$27 800). A plot of the same size would cost N$208 200 in a middle-class area such as Khomasdal in Windhoek, making it the most expensive, followed by Swakopmund (N$76 000).

At Ondangwa, the same size erf would cost N$32 000, at Katima Mulilo N$28 000 and at Rundu N$27 800.

“Though average growth of land prices has declined from the five-year average of 9% to 3% year-to-date, land still remains exorbitantly elevated, especially in Windhoek and coastal towns,” First Capital states.

The report says the high prices of land in Windhoek and at coastal towns can be explained by the higher demand for land in these towns.

“Other than land being costly in these towns, the rising supply deficit in land servicing and delivery continues to put pressure on prices. However, this research concludes that other than the mismatch between demand and supply of land, inefficiencies in servicing of land as well as speculative motives among private developers equally contribute to high urban land prices.”

The report concludes that building material prices are expected to remain stable throughout 2020.

“Given the dismal economic outlook, demand for cement is expected to remain weak, implying that the increased competition between two domestic producers (Ohorongo and Whale Rock) will continue to be based on reducing prices.”

It says land prices remain persistently high, which continues to be a limiting factor in acquiring residential property, especially in Windhoek and at the coast.

ELLANIE SMIT

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