Third quarter property prices show deeper contraction

The FNB House Price Index for the third quarter of 2019 revealed a further decline in property prices. When comparing the Price Index of September 2019 to September 2018, the rate declined by -5.1 percent. The same quarter of 2018, when compared to 2017, had recorded a decline of only -2 percent. Thus, a historic low was reached, with an average Namibian home costing N$1 120 805 by the end of September 2019.

However, central Namibia saw property prices rise by 3.8 percent for the first time since February 2018. The third quarter of 2018 had recorded a contraction of 4.7 percent. The coastal region once again recorded the poorest price growth with prices contracting by 5.4 percent compared to a contraction of 1.9 percent over the same period in 2018.

After entering negative territory in April 2019, northern prices continued to remain weak with a contraction of 4.6 percent recorded in the third quarter. The same period in 2018 had recorded a rise in prices of 6.7 percent. Prices in the southern region grew by 15.3 percent by the end of September 2019. There, average house prices reached N$925 000.

The year 2019 will be remembered for its bleak economic outlook and slow demand for properties. Uncertain consumers held back on precious income, hence the slack trading of real estate and the pressure on property prices. Sellers have had to drop their asking prices by 22 percent before securing a sale and a single property remains on the market for an average of 8 months before it is sold. These dynamics have kept growth in house prices at bay.

The outlook does not seem very cheerful: The smaller, cheaper properties will probably continue trading actively, but trade in the medium segment will probably be weak, whereas large and luxury properties will most likely experience subdued trade. Household spending power is weakening.
As a result, property prices will remain in the red, particularly in the medium to upper end of the market.



Ruusa Nandago
Marketing Research Manager


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