Upswing continues in housing prices as buying activity turns positive

FNB House Price Index Fourth Quarter 2024 - Key Highlights

• The FNB House Price Index reports a 12-month average growth rate of 8.7% at the end of the 4Q24 compared to 7.0% at end 3Q24 and 1.5% in 4Q23.
• The 12-month national weighted average house price was recorded at N$1,319,987 in 4Q24 slightly above the average price in the 3Q24 at N$1,303,179 and noticeably higher than N$1,214,674 in 4Q23.
• Volumes moved out of contraction at 0.9% on a 12-month average in 4Q24 from -8.2% in 3Q24 and -29.3% in 3Q23.

According to the Namibia Statistics Agency’s Labour Force Report, only 46.2% of the working age population are active in the labour market. Of these 55.4% earn less than N$5 000 per month with only 2.6% earning N$40 000. This implies that the current growth being observed is driven by a smaller proportion of the population as affordability bottlenecks continue to limit larger participation. There could be an aspect of foreign individuals purchasing houses and driving the growth in buying activity.

Additionally, the uptake of mortgage credit by households currently remains subdued with an average of 1.5% in 2024 below the 3.0% average growth recorded in 2023. Moreover, inflation ticked up slightly to 3.6% in February 2025 from 3.2% in January 2025, with the sub-category of Housing and utilities inflation increasing to 4.2% in February 2025 from 3.2% in January 2025. These expenses are expected to continue rising and impact domestic household affordability and willingness to purchase. As housing prices rise, consumers may be compelled to downgrade their preferences, driving up demand for the limited supply of affordable housing. Without regulatory intervention, this will likely lead to upward pressure on prices in this segment.

The property market is showing signs of recovery. However, due to the limited supply, possible upside risks to inflation and the growing demand could cause prices to remain elevated and continue to price out most individuals and remain unaffordable. Therefore, the rising costs and supply constraint could slow the pace in buying activity and housing prices are expected to remain elevated.

Conclusion
There is improved consumer sentiment as the demand for residential property improved into 4Q24. The growing interest from foreign individuals in purchasing homes is possibly linked to expats in the oil and gas and supporting industries requiring accommodation.

Additionally, the central, coastal, and northern regions continue to drive the increased housing prices whilst the southern region remains in contraction. From a supply side perspective, transaction volumes improved substantially for most regions whilst the northern region remained in contraction. The delivery of land surged in 4Q24 and was driven by all regions’ improved growth and underpins the growing momentum in buying activity.

House prices are expected to remain elevated with increased demand driven partially by households moreover, due to a disconnect witnessed in national accounting data and extension figures, it is clear that an external factor (possibly savings or foreign interest) is supplementing buying activity. Therefore, the FNB House Price Index should continue its positive trajectory despite slow growth in mortgage credit demanded by households which seems to be outweighed by the increased demand in the residential property market by market players possibly using alternative means of financing such as savings and equity.




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