Housing prices remain out of reach for many Namibians despite a drop in prices in recent months, property experts have said.
According to the FNB Residential Property Monthly report, average house prices dropped by 8.8 percent in March 2018 to N$1,1 million, a third straight contraction and the sixth in the last seven months.
FNB Namibia Reasearch Analyst, Josephat Nambashu, said in an interview that overall property prices are likely to continue decreasing due to the imminent increase in supply of affordable housing stock.
“We expect the housing mix to change substantially, such that there will be much more low cost housing on the market,” Nambashu said.
He explained that with an average household income of N$150,000 p/a, Namibia should be aiming to deliver houses around the N$420,000 price mark, for housing to become affordable.
Founder and Property Specialist at Sell Fast Real Estate and Auctions, Uripi Kahorongo, told the Windhoek Observer that even with prices going down, the majority of Namibians, especially those in the low-income bracket where there is a bigger backlog for inexpensive housing, are still not able to afford to buy a house.
“The majority of our people can qualify for a home loan of N$700-800,000 which leaves them unable to afford houses because an average house is over a million dollars,” Kahorongo said.
According to Kaharongo, an average 3-bedroom house in Soweto with a garage costs N$1.4 million while a 3-bedroom house in Otjomuise is over N$1 million.
The Head of Homeloans at Nedbank Namibia, Riaan Keulder, said the availability of serviced land throughout the country could allow developers to decrease development costs.
“Already serviced land could help to support affordable housing projects,” Keulder said.
Indeleni Nanghonga, an Economist at Simonis Storm, said there is an over-supply of million dollar houses in the market leading to houses selling under valuation.
“As a means for housing to become more affordable, supply needs to come down with the demand moving up, which will take a long time. So until that happens, houses will continue selling under valuation,” Nanghonga said.
According to the experts, the introduction of the US dollar to the housing market through Angolans who bought properties in Namibia resulted in high prices.
Housing prices were also pushed up by demand from people in the once lucrative construction sector and those employed in the mining sector.
“Another reason the prices in Namibia, especially in the capital, Windhoek, sky rocketed was also due to urbanization. Everybody was coming to the city for better standards of living and this led to a high demand for low cost houses when there was only a short supply,” Kahorongo said.
However, the crash of world oil prices about three years ago and the subsequent exit of the US dollar weildling Angolans and the recessionary state of the Namibian economy, have combined to negatively affect the demand for housing.
According to the FNB Residential Property Report from March 2018, house prices in the central parts of Namibia fell by 4.1 percent, while Okahandja prices contracted by 13.7 percent.
Houses at the Coast fell by 38 percent.
However, the Northern parts of Namibia have had a property price bump signalling an increase of 12.3 percent.
The Southern market was constantly unstable with property prices rising by 33.8 percent after decreasing by more than 21 percent just five months prior.
Posible solutions for expensive housing prices would include an increase in availabilty of serviced plots.
“Municipalities will have to find innovative ways to service thousands of stands each and every year, to make this a reality. This would generate sufficient volumes to make land servicing and housing construction more affordable to the end user, whilst providing attractive returns for developers and municipalities alike,” Nambashu said.
He said although land delivery has been disappointing over the past decade, the resent establishment of 64 new residential neighborhoods across the country, is bound to change the status quo.
Kahorongo said solution in the housing crisis lies in finding an alternative building solution.
“But we have tried that with some of the banks, but they are not amendable to that. You know why? Because they are going to lose.”