House building costs up 3.4%

March 2019 prices show that constructing a standard three-bedroom house will cost an average N$525 946 in Windhoek, while in Keetmanshoop it will cost N$334 235 due to varying land and building materials prices, First Capital says in their latest report on building costs. Taking into consideration all costs involved in the house construction value chain, land accounts for 5% of total cost in Keetmanshoop while in Windhoek it accounts for 40%, the analysts say. “Building materials remain the most significant cost component in the house construction value chain, on average accounting for 64% of total cost in Keetmanshoop, Rundu, Katima Mulilo and Ondangwa,” First Capital says.Land pricesThe cost of serviced land in Windhoek is 41 times higher than the cost of land in Nkurenkuru, which is the cheapest. The price in Windhoek is also 8 times higher than the national average price of land (excluding Windhoek), First Capital says.On average land costs N$555 per square meters in Windhoek's Khomasdal suburb which is considered an average income location. It costs N$205 per square meters in coastal towns and N$58 per square meters in northern towns. “High prices of land in Windhoek and coastal towns can be explained by the higher demand as opposed to the supply of land in these towns,” First Capital says. In addition, the analysts add, the mismatch between demand and supply of land, inefficiencies in servicing of land, as well as speculative motives among private developers equally contribute to high urban land prices.Cement and sandPrices of cement (high & semi strength) declined by 10% on average in March compared to March 2018. This is due to the increase in competition amid the subdued demand, according to First Capital.Domestic production capacity of cement has more than doubled to 2.2 million tons per annum in March 2019 compared to 1 million tons per annum in March 2018. “Despite a surge in production capacity, local demand remains fairly low at 600 000 tons of cement per annum,” First Capital says.Price of both building and plastering sand increased by 46% on average in March compared to a year ago. “The surge in sand prices is largely due to reduced competition owing to the closure of non-compliant mining operations. In addition, the relocation of some sand mining activities further away from construction sites translated into higher transportation costs,” First Capital says.Alternative structuresIn addition to the traditionally used brick and mortar, the housing market recently saw the introduction of an alternative housing structure which uses polymer concrete for the wall and sandwich panels for the roof. The cost comparison shows that a brick and mortar structure would cost 27% cheaper than the current cost of constructing a polymer concrete structure, First Capital says.From the duration perspective it would take two weeks to build a polymer concrete house, whereas a brick and mortar house would take three months to construct. “However, given the inefficiencies in the housing construction market due to frequent defects and delays in completing construction work, as well as speculative pricing strategies used by contractors, constructing brick and mortar houses has generally been costly,” the report states.AffordabilityThe housing deposit gap measures the level by which the prevailing price of acquiring a house exceeds the average affordable price in line with average income levels of households. On average a formal employee can afford a house costing N$495 000, First Capital says. Houses priced above the average affordable price would mean that a deposit in line with the excess amount will be required. “The cost of building a standard house according to our model specifications falls within the affordable range of an employee. “However, the cost to build a polymer concrete house structure and the selling prices of Osona Village houses, NHE mass houses and the prevailing house prices (FNB House Price Index) all exceed the cost considered affordable to an average income earner, which implies that a deposit of the same amount would be required to acquire the house,” First Capital says.

House building costs up 3.4%

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Republikein 2026-06-18

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House building costs up 3.4%

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Republikein 2026-06-18

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