Rent squeeze tightens grip on consumers' wallets

On a 12-month rolling basis, average rent in Namibia in the third quarter last year was N$7 177, up 0.18% from the previous quarter and 4.1% higher than the third quarter of 2022.In monetary terms, Namibians on average paid N$284 more rent per month in the third quarter last year than the same three months in 2022.“After moving out of contractionary territory in March 2023, the FNB Rent Price Index remained positive for two consecutive quarters, reaching a 12-month average of 4.7% in the third quarter of 2023 from 5.8% in the second quarter and 0.1% in the third quarter of 2022,” says FNB Namibia economist Ruusa Nandago.SizeWhen considering bedroom size, the three-bedroom and more than three-bedroom segments grew by 4.0% and 9.2% respectively, while the one- and two-bedroom segments contracted by 4.6% and 9.0% during the third quarter last year. Average rent prices in the quarter under review were as follow: one bedroom N$3 483, N$5 443, two bedrooms N$9 907, and N$22 703 for three and more than three-bedroom segments. The growth in the average deposit charged has also been remarkably resilient during 2023. It stood at 14.8% in the third quarter last year, compared to 15.1% in the previous quarter and 3.6% in the third quarter of 2022.Constrained“The resilience of the rental market is a surprising outcome, given the high price and elevated interest rate environment during this period,” Nandago said.Interest rates increased by a cumulative 400 basis points, while the 12-month inflation rate stood at 6.2%. A constrained macroeconomic environment would ordinarily limit price growth as landlords struggle to pass on rental increases to existing tenants amid deteriorating affordability, Nandago said. Additionally, in this scenario, landlords would be willing to bargain lower rental prices and deposits with prospective tenants, she said. “A potential explanation for this conundrum is that individuals are delaying purchasing property and choosing to rent for longer given the elevated interest rate environment and affordability constraints,” Nandago said. VolumesThe significant decline in house price transaction volumes – down by 27.7% in the third quarter of last year – corroborates this view. “These dynamics may explain why the resilience is mostly observed in the three-bedroom and more than three-bedroom segments, rather than in the lower bedroom segments,” Nandago said. Moving forward, Nandago expects the rental market to remain fairly stable as inflation starts to moderate and the repo rate remains at its peak of 7.75% with a shallow cutting cycle through to 2026. “We also take note of the adjustments in the loan-to-value ratios which became effective on 31 October 2023, which might incentivise investments in residential property, thereby increasing the supply of rental property,” she said.

Rent squeeze tightens grip on consumers' wallets

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Republikein 2025-06-19

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Rent squeeze tightens grip on consumers' wallets

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