BUSINESS - ECONOMY
| 2013-08-07House prices remain high
Chamwe Kaira
THE FNB House Price Index fell by 5,7% in March with prices remaining under pressure since peaking in September last year.
“This was evident across most property markets with the exception of the southern property market,” said Namene Kalili, FNB Namibia manager Research and Competitor Intelligence.
According to Kalili this was based on a short term price movement and that annualised price movements paint a different picture.
“On an annualised basis, house prices have merely decelerated and when inflation is stripped out, real house prices increased by 14,5% year-on-year. This is lower than the 19% recorded in December and the 15% last month. Therefore, the latest figures merely indicate that real house prices are increasing at a slower pace than in previous months and are a long way from deflating. The last time real house prices deflated was 2008/2009 when the economy had double digit inflation,” said Kalili.
The report further said decelerating house prices were underpinned by robust volume growth over the past nine months.
“For the month of March, volumes rose by 25% year-on-year. This is by far the highest volume growth in the housing market since the beginning of 2008, but we must remember this is off a very low base, after volumes contracted from 2008 to 2010. Therefore volumes remain well below the levels measured during 2008 to 2010, but at least there is recovery.
“The volume growth remained highly concentrated in the middle to upper price segments. For the first time in a very long time, new housing supply contributed to the volume growth. In the Windhoek market, new houses accounted for 44% of the volumes sold, up from a mere three percent a year ago,” he said.
Prices in the central region of the country fell by 5,6% month-on-month thus reducing the annualised price movements to 11%, he said.
In Windhoek, Okahandja and Gobabis, price movements were weak across all price segments while figures suggest that house prices are under pressure while at the coast, prices fell by 2,3% month-on-month at a time when they were expected to be seasonally strong.
“This has deflated coastal property prices by 10,9% year-on-year or N$492 000 on average. For March, property prices fell by 10,5% from the previous month in the northern property market. This was the third consecutive month of weakening property prices which were down 9,3% year-on-year.
“House prices in the southern property market remained volatile due to very thin volumes. In the south, house prices increased by 6,1% and was the only property market to show positive growth in prices during March.
Kalili also said annualised property prices continued to decelerate for the third consecutive month on the back of robust volume growth.
“Volume growth was fueled by increased new house delivery, thanks to increased developer activity last year. This has decelerated real house price appreciation from 19% in December to 14,5% in March. We expect real house price appreciation to decelerate even further over the remainder of the year on the back of continued volume growth.
“The lack of housing supply that has dogged the local economy for the past five years is finally adjusting to housing demand which may tame house price inflation for the rest of the year,” Kalili said.
The Knight Frank Global House Price Index rose 6,6% during the first quarter of 2013 with Hong Kong continuing to top the list while China is catching up rather quickly as it had the highest growth over the past three months.
“Namibian house prices increased by two percent, according to the Knight Frank methodology. This would place 19th on the list and a significant drop from the 4th position it occupied in the final quarter of 2012 due to local house prices deflating in US dollar terms over the past three months,” said Kalili.
“This was evident across most property markets with the exception of the southern property market,” said Namene Kalili, FNB Namibia manager Research and Competitor Intelligence.
According to Kalili this was based on a short term price movement and that annualised price movements paint a different picture.
“On an annualised basis, house prices have merely decelerated and when inflation is stripped out, real house prices increased by 14,5% year-on-year. This is lower than the 19% recorded in December and the 15% last month. Therefore, the latest figures merely indicate that real house prices are increasing at a slower pace than in previous months and are a long way from deflating. The last time real house prices deflated was 2008/2009 when the economy had double digit inflation,” said Kalili.
The report further said decelerating house prices were underpinned by robust volume growth over the past nine months.
“For the month of March, volumes rose by 25% year-on-year. This is by far the highest volume growth in the housing market since the beginning of 2008, but we must remember this is off a very low base, after volumes contracted from 2008 to 2010. Therefore volumes remain well below the levels measured during 2008 to 2010, but at least there is recovery.
“The volume growth remained highly concentrated in the middle to upper price segments. For the first time in a very long time, new housing supply contributed to the volume growth. In the Windhoek market, new houses accounted for 44% of the volumes sold, up from a mere three percent a year ago,” he said.
Prices in the central region of the country fell by 5,6% month-on-month thus reducing the annualised price movements to 11%, he said.
In Windhoek, Okahandja and Gobabis, price movements were weak across all price segments while figures suggest that house prices are under pressure while at the coast, prices fell by 2,3% month-on-month at a time when they were expected to be seasonally strong.
“This has deflated coastal property prices by 10,9% year-on-year or N$492 000 on average. For March, property prices fell by 10,5% from the previous month in the northern property market. This was the third consecutive month of weakening property prices which were down 9,3% year-on-year.
“House prices in the southern property market remained volatile due to very thin volumes. In the south, house prices increased by 6,1% and was the only property market to show positive growth in prices during March.
Kalili also said annualised property prices continued to decelerate for the third consecutive month on the back of robust volume growth.
“Volume growth was fueled by increased new house delivery, thanks to increased developer activity last year. This has decelerated real house price appreciation from 19% in December to 14,5% in March. We expect real house price appreciation to decelerate even further over the remainder of the year on the back of continued volume growth.
“The lack of housing supply that has dogged the local economy for the past five years is finally adjusting to housing demand which may tame house price inflation for the rest of the year,” Kalili said.
The Knight Frank Global House Price Index rose 6,6% during the first quarter of 2013 with Hong Kong continuing to top the list while China is catching up rather quickly as it had the highest growth over the past three months.
“Namibian house prices increased by two percent, according to the Knight Frank methodology. This would place 19th on the list and a significant drop from the 4th position it occupied in the final quarter of 2012 due to local house prices deflating in US dollar terms over the past three months,” said Kalili.
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