The rental market in Namibia has continued to flourish amid high prices, as individuals opt for prolonged rentals over property purchases due to elevated interest rates and affordability constraints in the first three quarters of 2023.
According to First National Bank (FNB)Namibia economist Ruusa Nandago, there was a significant decline of 27,7% in house price transaction volumes in the third quarter of 2023.
“The decision by individuals to delay the purchasing of properties and rent for longer will continue to support the rental market.
These dynamics may explain why the resilience is mostly observed in the three-bedroom and more than three-bedroom segments, rather than in the lower bedroom segments. Moving forward, we expect the rental market to remain fairly stable as inflation starts to moderate and the repo rate remains at its peak of 7,75%, with a shallow cutting cycle through to 2026,” said Nandago.
The adjustments in loan-to-value ratios, effective from 31 October 2023, are anticipated to incentivise investments in residential property, potentially increasing the supply of rental property.
After exiting contractionary territory in March 2023, the FNB rent price index remained positive for two consecutive quarters, reaching a 12-month average of 4,7% in the third quarter.
The average rent price on a 12-month rolling basis stood at N$7 177.
“The three-bedroom and more than three-bedroom segments grew by 4,0% and 9,2%, respectively, while the one and two-bedroom segments contracted by 4,6% and 9% during the third quarter.”
Average rent prices for different segments were recorded as N$3 483 for one-bedroom flats, N$5 443 for two-bedroom apartments, N$9 907 for three-bedroom homes and N$22 703 for houses with more than three bedrooms.
The index highlighted that residential rental listings totaled 1 725 units in the third quarter of 2023, down from 2 143 listings in the second quarter.
The one-bedroom segment constituted 53% of residential rental listings, with two-bedroom, three-bedroom and more than three-bedroom segments sharing at 31%, 14%, and 3%, respectively.
The FNB house price index reported a 12-month average growth of 3,3% in the third quarter of 2023, with regional variations.
Notably, the coastal area recorded the highest growth at 14,4%, while the central, northern and southern regions had growth rates of -1,1%, 0,8% and 7,3%, respectively.
The overall national house price stood at an average of N$1 218 086 during the third quarter of 2023.
Nandago said there were persistent affordability bottlenecks in the residential property market despite potential upsides from adjustments in loan-to-value ratios and activities in the oil, gas and renewable energy sectors at the coast.
“While demand remains weak, supply-side issues remain a binding constraint on buying activity in the residential property market.”
– email:shania@namibian.com.na; X:@ShaniaLazarus
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