Housing market remains vulnerable

ALTHOUGH higher price tags on especially large houses in Windhoek during April drove the value side of the FNB Housing Index up to levels of last January, everything is far from coming up roses in the local property market.

Housing demand is still subdued despite lower interest rates, prices for smaller houses remain under pressure and prospective home buyers are facing tighter lending criteria. Nonetheless, FNB’s Manager for Market Research and Competitor Analysis, Namene Kalili, remains upbeat about prospects.’The demand for housing in terms of deeds registered (in April) fell by 54 basis points year-on-year to 240 bonds. This is far cry from the 320-level experienced in 2008, but there is a sense of recovery on a month-on-month basis,’ Kalili said when the released the latest FNB Housing Index yesterday.Month-on-month, overall volumes grew by 24 per cent and 30 per cent respectively for March and April, bringing the volume index to 116,5 points.The house price index recovered from a decline of 17 per cent in March to an increase of ten per cent in April, and ended the period at 99,6 points.Kalili said that, while prices for smaller houses remained low, medium houses prices held firm and those for large houses increased.’We find that brand new low-cost housing continue to drag down house prices in that segment (smaller houses) and put downward pressure on existing houses in the same segment and town. Therefore sellers are finding it very difficult to sell existing houses at N$300 000 when brand new units of a similar size are selling for N$200 000,’ Kalili said.Looking at volumes in detail, Kalili said the numbers of houses sold in the central region dropped by 20 per cent compared to April last year.This was evident in the small and large house segments, where volumes fell by 28 per cent and 14 per cent respectively. This was particularly evident in Windhoek,’ he said.Despite robust month-on-month growing at the coast, year-on-year volumes were down 34 per cent. Small and medium houses fell by 37 per cent and 35 per cent respectively, while volumes for large houses grew by eight per cent. Month-on-month growth at Henties Bay and Walvis Bay were 58 per cent and 100 per cent respectively.Outapi and Ongwediva lead growth in the North, where volumes were up five per cent.’Small and large house volumes grew by four per cent and 14 per cent respectively,’ Kalili said.In the South, houses sold fell by 22 per cent compared to April last year.According to Kalili, transactions were limited to Mariental, Keetmanshoop and Lüderitz, where small house volumes dropped by 12 per cent, medium houses volumes by 40 per cent and those of large house by 71 per cent.He added that confidence may return to the large house segment where the prices are on the increase.’Growth in this segment is particularly evident in the central, coastal and southern areas,’ he said.FNB foresees ‘staggered improvement’ in the market, both in terms of value and volumes, ‘as new developments come onto the market’.’A lot will depend on the rate at which brand new houses are released onto the market,’ Kalili said, adding that the upcoming municipal auction may be instrumental in increasing demand for houses and lowering prices three months down the line.jo-mare@namibian.com.na