Housing prices grew whilst buying activity remained subdued

Key Highlights

• The FNB House Price Index revealed a 12-month average growth of 1.7% at the end of Q2-2024, compared to 0.3% in the first quarter of 2024 and 6.2% in the second quarter of 2023.
• The 12-month national weighted average house price was recorded at N$1 263 673.
• Sold properties remain in contraction, with the 12-month average at -17.7% in Q2-2024 from the revised -26.0% and -23.3% recorded in Q1-2024 and Q2-2023, respectively.

With average housing prices indexing at a 1.7% rise over the past year, the growth rates for the small, medium, and luxury segments stood at minus percentages, with only the large segment showing positive growth of 3.2%. From a regional perspective, the central region growth rate improved to 2.9% whilst the coastal, northern, and southern regions contracted since the first quarter of 2024.

Although the number of properties sold showed improvement, the index remained in negative territory. Growth in buying activity remained subdued amidst elevated interest rates. Mortgage credit extended to households remained weak at 1.9% y/y at the end of July 2024.

The Bank of Namibia cut interest rates to 7.5% in August 2024, earlier than expected. We expect conditions to improve in the medium-term if further rate cuts materialise in 2025.
The growth in sales of residential land moved from negative double digits to 9.5% in Q2-2024, from -21.5% y/y at the end of Q1-2024 and -22.4% y/y recorded at the end of Q2-2023.
The low growth in land delivery is observed across most regions with sharpest declines observed in the central and northern regions at -27.0% and -21.4% respectively. The coastal region recorded a contraction of 14.1%, while the southern region recorded a growth of 157.1%.

The improvement in the residential property market has been limited as consumers still face monetary constraints due to high interest rates. Also, the limited supply of serviced land is weighing on the property market. The marginal increases in housing prices observed in the first half of the year are mainly driven by the prices in the central region while volumes across most regions remain in contraction, with only the south showing positive growth. This significant growth in the south could be attributed to increased buying activity in Lüderitz as oil and gas activities ramp up.

Plans are underway for the construction of houses, with the National Housing Enterprise aiming to provide 856 houses across Namibia, and the collaboration between the government and municipality of Swakopmund which should result in 233 erven and 87 houses for middle-income homeowners.






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