Cautiously optimistic outlook on housing scene

In response to lacklustre GDP growth in the second quarter of 2025 (1.6% y/y), compared to 2.8% in 1Q25 and 3.3% in 2Q24, the Bank of Namibia reduced the repo rates by 25bps to 6.50% in October 2025. This aimed to stimulate growth in the economy as inflation also eased, averaging 3.6% in September 2025 from 4.6% in the same period in 2024. These measures ease the burden of borrowers; however the magnitude of the impact may be limited as unemployment rates remain high and wage growth is weak.

Looking ahead, growth in the FNB House Price Index may continue to moderate, following two consecutive quarters of easing house prices. Nevertheless, transaction volumes continue to outperform, underpinned by strong housing demand despite persistent supply constraints. Base effects from the previous year may also be influencing current dynamics, as in 3Q24, price growth rose to 7.0%, while transaction volumes declined by 8.2%. In contrast, 3Q25 saw price growth slow to 5.9%, while transaction volumes surged to 18.4%, driven by increased foreign interest and rising investment in rental properties. To improve housing market access, proactive municipal efforts to accelerate land servicing, could significantly expand property ownership opportunities for a wider segment of the population.

The housing market continues to show resilience, with sustained growth in the FNB House Price Index driven by strong buying momentum and elevated property values.

While prices are easing in most regions, the coastal market is rebounding and transaction volumes remain robust across the country, except for a marginal decline in the central region. However, the slowdown in land delivery and plot sales, particularly in 3Q25, highlights persistent supply-side constraints that could limit future growth.

On the demand side, sustained interest from foreign buyers, particularly in coastal regions, alongside growing local investment in rental housing is expected to continue driving market activity. Efforts to reduce financial strain on households and expand access to long-term credit are likely to become more evident over the medium term.

Nonetheless, several risks could temper this positive outlook. High unemployment and weak wage growth continue to restrict purchasing power, while potential inflationary shocks or global interest rate hikes could reverse recent gains in affordability. Delays in land servicing and rising construction costs may further constrain supply, and any deterioration in consumer confidence or macroeconomic stability could dampen investment sentiment.

Overall, while the housing sector faces notable headwinds, the underlying demand drivers and supportive policy measures point to a cautiously optimistic outlook. Strategic interventions to accelerate land servicing and improve credit access will be critical to sustaining momentum and ensuring inclusive growth in the residential property market.

For more information, please call: 061 – 299 2222 or visit www.fnbnamibia.com.na