The country’s real estate sector, in particular the residential property segment, which was previously propped up by cash-flush Angolans, has taken a hit, resulting in fewer buyers negotiating prices downwards, experts said this week.
Experts say the migration of Angolan tenants back to their country, had left a vacuum in the market, leaving some developers, who were building without sales, sitting with vacant stock.
EON Real Estate Managing Agent, Izelle du Toit, said most houses were now being sold below valuation prices with the same applying to rentals, where landlords were no longer receiving the same rental income compared to two years ago.
As a result, Du Toit said, most landlords were renting out their properties for less than what they used to instead of leaving them vacant.
“Developers anticipated more growth and started to build without plot-and-plan sales and now sit with vacant property. The property market was over inflated,” Du Toit said.
She denied sentiments that there is an oversupply of property in the market, arguing that the banks’ lending policies had capped this trend.
“We do not have more than usual properties, but the banks have lifted the bar for individuals to qualify for home loans.
“Another factor is the cost of units to investors, which reached in excess of N$22,000 per sq metre and meant that rental prices reached very high levels and tenants resisted the high rent levels.”
She added that the recent introduction of deposits for second mortgages and subsequent properties by the Bank of Namibia had also caused normal investors to take a back seat.
FNB Namibia Holdings Research Analyst, Josephat Nambashu, admitted that mortgage credit demand has been low over the past two years.
“Overall, buyers are few and the few that remain are negotiating prices down and are not merely accepting asking prices and this has resulted in property spending 140 days on the market, up from 102 days a year ago,” Nambashu said.
He explained that mortgage demand was a function of interest rates, macro-economic growth and employment that underpinned the variations in the year-to-year mortgage volumes.
He added that the supply of housing had mainly been in the middle to upper price segments, while demand was concentrated in the lower price segment.
“The lower price segment has not been adequately catered for and thus the excess demand will persist until housing delivery to the lower price segment is increased in such a manner as to meaningfully address the backlog.”
Nambashu, however, said in as much as there are downward pressures on property prices right now, the data does not show that prices are actually declining relative to last year’s averages.
He also said that the bank does not believe that the economic downturn will persist.
“Henceforth, property prices should theoretically normalise in the absence of increased housing delivery to the lower price segment.”
Nambashu said mortgage uptake peaked in 2013 with about 16 percent volume growth, while 2009 had the lowest volume growth.