Urban land is cheaper in Keetmanshoop, followed by Rundu and Katima Mulilo, while it remains expensive in Windhoek and Swakopmund, the First Capital House Building Cost Index shows.
The index is derived from weighted prices of building materials and labour required to build a standard three bedroom house.
Since land is part of the required components in the house construction value chain, the report has also taken stock of urban land prices overtime.
Milner Siboleka, Assistant Portifolio Manager & Economist at First Capital Treasury Solutions, said on average it will cost N$14,300 in Keetmanshoop for land measuring 375 square meters, whereas the same land would cost N$115,500 in a middle-class location such as Khomasdal in Windhoek.
“Other than the mismatch between demand and supply of urban land, inefficiencies in land servicing as well as speculative motives among private developers equally contribute to high urban land prices. If land was serviced by local authorities who of recently have limited capacity due to financial constraints, the average prevailing cost of land could be reduced by at least 20 percent,” Siboleka said.
In terms of cost of building materials, he said the highest price is in Katima Mulilo (N$218,600) and Swakopmund (N$218,000) while Keetmanshoop, Rundu and Windhoek offers the cheapest building materials compared to other towns.
“The differences in building materials cost by town reflects varying prices due to supply sources that are largely unique to every town,” he said.
Overall, the index reached 114.2 in August compared to 109.7 index in August 2017, representing an increase of 4.1 percent in the cost of building a house.
The report said cement prices remained somewhat stable with a marginal increase of 3 percent in August.
“Prices are further expected to remain stable throughout the last quarter of 2018 leading to 2019 due to the combination of increased production capacity and slowing demand. With the entrant of Whale Rock cement, local production capacity more than doubled from 1 to 2.2 million tons of cement per annum, while domestic demand of cement has been gradually declining after peaking at 795,000 tons in 2015,” Siboleka said.
The price of super bricks increased by 3.5 percent in August compared to the same period last year.
Siboleka said the increase of brick prices is in line with the average price increase of cement, sand and transportation costs.
“With increasing competition among brick suppliers, it is expected prices will stabilise with the possibility of a marginal decrease. This is evident in towns like Windhoek and Keetmanshoop where some suppliers are now selling super bricks at N$1.90 per brick.”
Prices of sand increased by 5.3 and 6 percent for building and plastering sand respectively in August mainly influenced by extraction site landscape and transportation cost from the quarrying to the construction site.
Siboleka said the recent move towards regulating sand mining, could see environmental non-compliant suppliers closing down, thereby reducing competition in the market which could lead to high sand prices.
The prices of electrical building materials were 4.9 percent higher in August compared to a year ago, mainly as a result of a weak Namibia dollar compared to the US dollar.
Siboleka said the price of land serviced and sold by local authorities increased by 5 percent in August compared to the same period last year mainly because it was carried out by private developers unlike local authorities who receive government subsidies.