FNB Rental Index shows rental rebound
The FNB Rental Index for the first quarter of 2020 shows that overall residential rent prices rebounded from a two-year negative growth territory.
Frans Uusiku, FNB Market Research Manager explains that the Covid-19 lockdown will most likely paint a different picture in the second quarter of 2020. “Although we reached a 12-month average growth of 0.0% at the end of March, bringing the national monthly average rent price to N$ 7 465, we know that the pandemic has disrupted business activity, resulting in job losses and reduced income for the most part of the labour force. This is bound to have a devastating effect on tenants and landlords’ cash flow going forward. We expect the rental market to hit a growth plateau in the second quarter before it reverts back to negative growth territory.”
Growth in deposits charged by landlords contracted by 32.1% y/y at the end of March 2020 compared to a growth of 11.8% y/y recorded during the same period of 2019. This brought the deposit to rent ratio to a 10-year record low of 5.8%. The last time Namibia experienced such a low deposit to rent-ratio was in 2009 during the global financial crisis.
“While the impact of the COVID crisis and lockdown is not yet reflected in the data, the stark reality is likely to be reflected in the second quarter with a potential growth reversal in rent prices expected, as landlords may be forced to negotiate for discounted rent to remain afloat.”
“Although evictions are currently banned during the lockdown, tenants whose livelihoods are directly affected by the COVID-19 pandemic and lockdown will have limited or no income to pay up rent for the remainder of the lockdown period. All in all, the advent of this pandemic serves as a stark reminder to households and businesses to shore up their emergency funds to ensure that they are better prepared to survive unexpected future events,” concluded Uusiku.