Property market feels the pinch - Namibia
HOUSE sales in Namibia are slowing down and defaults on bond payments are increasing in tandem with higher interest rates and inflation.
Senior bank managers and estate agents say that at the moment there are more houses on the market than buyers, especially in the main centres of Windhoek, Walvis Bay and Oshakati.
Nedbank Namibia says this year's floods in the North also played a big role in people's ability to qualify for home loans.
Daniel Motinga, FNB Namibia's Senior Manager for Research and Development, says it now takes longer to sell houses.
"Potential sellers seem to have realised this, and are simply re-financing their houses as it is difficult to sell," he told The Namibian.
"Potential buyers are rationally postponing their purchases because of cash-flow challenges in the medium term.
In fact, the average person has little idea as to when interest rates and inflation rates will decline."
Motinga feels these economic factors are definitely playing a role, as people's disposable income has come under pressure and their purchasing power has diminished.
Motinga predicts that the property market will remain slow until late next year.
Nedbank agrees with Motinga that middle-class salary earners are particularly affected by the current economic climate, especially by the interest rate - currently at 15,25 per cent.
"Nowadays a N$500 000 house, which would have cost N$4 631 per month two years ago, now costs N$6 501 per month," Nedbank's public relations department says.
"Accumulating arrears have so far been resolved as clients do cover their defaults before it gets to repossession stage," according to the bank.
"Summoned defaulters almost always are quite capable of paying.
It seldom gets to pre-legal and repossession stage."
Property sales at Swakopmund have not showed a downturn, however.
"Many of the houses that were on the market last year were sold this year," says Lucia Jochelson of Sun Properties in Swakopmund.
"The mines opening here have a large influence on the market.
Also many South Africans are purchasing here now with the current situation in South Africa."
According to her, there is an increase in new housing developments too, such as the billion-dollar Aphrodite Beach between Swakopmund and Walvis Bay, the proposed Heritage Hill Development on the outskirts of Swakopmund and blocks allocated to developers to build housing for mineworkers.
There is also a strong demand for property at Usakos, Arandis and Karibib, where a N$1,8 billion cement factory was recently approved that would employ 250 people.
Jochelson feels that higher interest rates are only part of the story.
"Now the interest rate is 15,25 per cent, with a massive financial growth in our area, thus a very big demand for property.
Due to the economical growth and influx of people the prices of property will be determined by demand and availability.
"We must realise that the current economic climate does not influence us here the way it influences South Africa and the rest of the world for example, which are now in an economic slump," she says.
"Here we have an economic boom with all the new mines that are being developed, while our safe and peaceful environment and Swakopmund being the only real coastal resort in Namibia, also play a positive role."
She says the people hardest hit by higher interest rates are the "over-spenders" who have a lot of assets and too many debts.
"Some of my clients who feel the pressure are the local salary earners who cannot cope with the high food prices, the petrol price and the high interest rate," she says.
Charles Samuelson, Vice Chairman of the Namibian Estate Agents Institute, says there is a steady supply of new home developments.
"Developments are continuing despite the economy.
It may be a little less, however, because developers are more careful," he said.
"In the short to medium term, the situation may still be tight, but obviously, depending on many factors, everyone hopes to see some relief as from next year."
Article by: ADAM HARTMAN - www.namibian.com.na