First quarter 2021 FNB HPI shows growth in mortgage sales within the medium to higher- end market

Windhoek, July 22–“Housing markets across most advanced and emerging economies have remained buoyant, despite the marked slowdown in global economic activity. Similarly, home buying activity in the domestic economy has continued to rally although the uptake in mortgages is relatively tilted towards the medium to higher-end of the market”, says Frans Uusiku, FNB Market Research Manager.

The rebound in house price growth seen since the end of 2020 has thus been driven by these segments. The latest readings of the FNB House Price Index show annual growth of 7.2% y/y at the end of March 2021 compared to -5.6% y/y recorded over the same period in 2020. This is the highest growth figure recorded since October 2016 and points to the pass-through effects of monetary policy easing that started in Mid-2019. The national weighted average house price is now recorded at N$1 176 882 from N$1 038 577 in March 2020.

“Admittedly, the low-interest rate environment has provided a considerable financial relief to households during these challenging times, particularly with regard to debt servicing. However, housing affordability within the small housing segment remains constrained due to limited stock and slow pace of land delivery”, adds Uusiku.

In effect, overall growth inland delivery slowed to 4.4% y/y at the end of March 2021 from 85.5% y/y seen in March 2020. On the other hand, we believe the accommodative monetary policy and struggling rental market have created a window of opportunity for property investors to capitalize on distressed sales. Anecdotally, the widely accepted view within the real estate industry suggests that properties have reduced in value by up to 20% depending on property value, with the higher-end asset class devaluing the greatest. As such, home buying activity in the medium to higher-end of the market has been largely characterized by repeat buyers, accounting for 74% of mortgage sales in the first quarter of 2021. This is congruent with the regulatory rule on loan-to-price ratio, and secondly; most of these property investors are likely to have greater access to savings to fund the required down payment

“As the remote working culture continues to evolve along with the growing relevance of digitalization, people, particularly non-client facing officials, will likely be freed to some extent from being office-bound. This means that many towns and suburbs will become viable as places of residence for homeowners. The manifestation of emigration seems to be gaining some traction in the northern region particularly in Ondangwa, Oshakati, and Rundu, just to mention a few. These are some of the towns where relatively high sales figures were recorded in the recent past. We continue to reiterate the need to accelerate the delivery of serviced land given that about 70% of the Namibian workforce can only afford a house that is priced below N$1.5m. This justifies the need for additional stock”, Uusiku concludes.

Robert Maseka
mrobert@namibiadailynews.info