FNB housing index: Volumes continue to disappoint

THE October 2010 Housing Index was released by the Manager: Research and Competitor Intelligence of FNB Namibia, Namene Kalili. According to the report, the gap between the FNB House Price Index and House Volume Index continued to grow in October, with the House Volume Index falling 13,8 base points, while the House Price Index climbed 8,7 base points.

Insufficient supply of new housing continues to plague the market resulting in escalating prices. On an annual basis, the House Price Index is up 12,4% while the House Volume Index is down 17,9%.

Kalili says: ?Perhaps prospective buyers are less willing to purchase at these price levels and are therefore staying put and upgrading existing properties as reflected in the robust growth in further mortgage bonds.?

FNB Namibia also announced that a trend towards pricier properties on smaller erven is beginning to emerge in the upper price segment. Here prices were up 1,2% month on month or 15,1% year on year, due to price escalations in the northern and southern Namibia. The median house price index for the lower price segment was slowed by properties in Windhoek, where the price index fell 11,5% in the lower price segment. This was rather surprising, as volumes were disappointing and the NHE was inactive in Windhoek during October in terms of bond registration.

Kalili added: ?House prices in the lower price segment ranged from N$232 000 to N$275 000, which is the lowest median price we have seen for central Namibia since January 2008. There has been a definite increase in the number of affordable erven in Windhoek during 2010.?

In terms of the Housing Volume Index, total properties registered came in at 242 properties as opposed to 262 properties during the previous month. Therefore the volume index is down 17,9% on an annual basis. Mortgage advances to individuals decelerated to 8,5% year on year, pushing the year to date average to 8,1% in October.

Mortgage advances growth appears to have stabilized. Says Kalili: ?We find that the bond market is growing at 7% year on year, with the difference coming from strong growth in the further mortgage market, where growth has accelerated to 20% year on year. The average age of the buyers continues to hover around 39 years old, with more married couples active in the housing market while the ratio of single men and women is declining.?

Lastly, developer activity in the mortgage space increased despite only 4 property deals concluded by developers. Total land brought by developers increased to 1,1 million square meters.

Of particular interest is the pending development at Brakwater, which may signal further residential developments to the north of Windhoek as is the case with Elisenheim.

Kalili concluded by saying that FNB believes that the FNB House Price Index was unsustainably high in October due to a shift in volumes towards the upper price segment.