Index shows rental rebound

Residential rent prices bounce back

21 May 2020 | Infrastructure

Frans Uusiku; FNB Market Research manager; “…we know that the pandemic has disrupted business activity.”

Contributed

Overall, residential rent prices rebounded from a 2-year negative growth cycle, says FNB Market Research Manager Frans Uusiku in the Rental Index for the first quarter of 2020.

However, he said that the Covid-19 lockdown is bound to paint a different picture when looking at quarter two of 2020.

“Although we reached a 12-month average growth of 0.0% at the end of March, bringing the national monthly average rent price to N$7 465, we know that the pandemic has disrupted business activity. This resulted in job losses and reduced income for the most part of the labour force and is bound to have a devastating effect on tenants and landlord cash flow going forward.”

Uusiku said that the rental market was expected to hit a growth plateau in the second quarter before it reverts back to negative growth territory.

“Looking at the first quarter of 2020, listed rental units were largely concentrated in the 1-bedroom and 2-bedroom segments. This accounted for 43% and 32% of the overall listings, respectively,” he said, adding that these rental units were only recorded in Windhoek where the rural-urban migration is relatively high compared to other towns.

“This observation continues to affirm the existing imbalance between the demand and supply dynamics in the housing market, particularly in the medium to higher-end of the market. The overall improvement in the rental index was driven mainly by the 2-bedroom and more-than-3 bedrooms segments. These grew by 3% and 2% y/y, respectively.”

Growth in deposits charged by landlords contracted by 32.1% y/y at the end of March 2020 compared to a growth of 11.8% y/y recorded during the same period of 2019.

This brought the deposit to rent ratio to a 10-year record low of 5.8%. The last time Namibia experienced such a low deposit to rent-ratio was in 2009 during the global financial crisis. The contraction was notable across all the four rental segments with the 1, 2, and 3-bedroom units contracting by 22.4%, 39.8% and 33.2% y/y respectively, while the more-than-3 bedrooms segment contracted by 28.1% y/y at the end of March 2020.

This implies that upfront tenancy deposit is becoming less of a requirement due to stifling economic conditions.

On the topic of rental yields, Uusiku said that on an annual basis, rental yields edged up by 0.3 percentage points to 7.8%y/y at the end of March 2020.

“This is consistent with the observed improvement in the overall rental index growth and continues to paint a lucrative picture of the Namibian rental market. It points to the fact that rent prices are growing at a relatively fast pace compared to growth in the house prices.”

According to Uusiku, the residential rental market had nearly evaded the negative growth territory, recording a 12-month average growth of 0.0% at the end of March 2020 compared to a contraction of 5.2%y/y recorded over the same period of 2019.

He added that this was likely to be reversed by the Covid-19 pandemic and the associated implementation of nation-wide lockdown effective from 28 March 2020.

“The impact of the Covid crisis and lockdown is not yet reflected in the data. The stark reality is likely to be reflected in the second quarter with a potential growth reversal in rent prices expected, as landlords may be forced to negotiate for discounted rent to remain afloat. Although evictions are currently banned during the lockdown, tenants whose livelihoods are directly affected by the Covid-19 pandemic and the lockdown will have limited or no income to pay up rent for the remainder of the lockdown period.”

Similar News

 

Namport looking to provide safekeeping for empty cruise liners...

1 week ago - 22 May 2020 | Infrastructure

Walvis Bay Travel restrictions resulting from the Covid-19 pandemic have invariably and adversely impacted the cruise tourism industry with tourist not travelling any...

Back to business at Namdock

2 weeks ago - 13 May 2020 | Infrastructure

PULLQUOTE; Walvis Bay Namdock, which docked vessels on the first day of resuming full operation, anticipates that its shipyard – which includes three floating...

Truck isolation facility opens

3 weeks ago - 05 May 2020 | Infrastructure

Walvis Bay • [email protected] An isolation facility strictly catering for incoming truckers was officially opened on Tuesday.The facility is located in the...

Largest container vessel calls at Walvis Bay

1 month - 27 April 2020 | Infrastructure

Walvis Bay • [email protected] The Maersk Sheerness on Friday became the largest vessel yet to call at the Port of Walvis Bay.Plans to facilitate the...

Isolation facility for incoming truckers

1 month - 20 April 2020 | Infrastructure

Walvis Bay • [email protected] A temporary isolation facility is currently being set up in Walvis Bay at the new industrial area adjacent to...

RA announces operational arrangements

1 month - 12 April 2020 | Infrastructure

The closure of all Roads Authority (RA) offices is in compliance with the directive on additional measures to curtail the further spread of Covid-19, as...

Namdock introduces lockdown measures

1 month - 08 April 2020 | Infrastructure

Walvis Bay The lockdown, in effect from 27 March until 17 April 2020, affects Namdock’s docking schedule, with an attendant impact on...

Namport geared to curb spread of Covid-19

1 month - 31 March 2020 | Infrastructure

Namport’s acting chief executive Kavin Harry said the company remains committed to playing its part in supporting the World Health Organisation and government’s efforts to...

Behuising: Waglys bygewerk

2 months ago - 24 March 2020 | Infrastructure

Swakopmund Die bestuurskomitee van Swakopmund se munisipale raad het goedkeuring gevra om die name van 687 geregistreerde inwoners wat behuising benodig by die meesterwaglys te...

Passenger vessel visits suspended

2 months ago - 24 March 2020 | Infrastructure

The Namibian Port Authority’s commercial executive Tino !Hanabeb confirmed that no cruise ships will be allowed to visit the port due to the ongoing coronavirus...

Latest News

Stricter control for truckers

2 hours ago | Health

Swakopmund • [email protected] governor Neville Andre announced strict measures to control the movement of truck drivers, citing the 21st case of Covid-19 in Namibia for...

Namport assists in repatriation of...

2 hours ago | Health

Walvis Bay • [email protected] The American passenger liner Carnival Fascination, docked at berth 1 of the port of Walvis Bay on Friday morning,...

Black Boy surfing the airwaves...

2 hours ago | Art and Entertainment

Walvis Bay • [email protected] Local rapper Bachmann (24) recently released his latest project, Black Boy, which is available on Donlu Africa, Soundcloud, YouTube, Facebook...

Namibians stranded at sea

1 day - 29 May 2020 | Local News

Swakopmund • [email protected] Carnival Fascination has been travelling up and down the Namibian coast for three days. On board are, among others, seven Namibians and...

CAN calls for better tobacco...

1 day - 29 May 2020 | Health

The Cancer Association of Namibia (CAN) has called on the ministry of health and government to review the Tobacco Control Act of 2010 in light...

Ten elephants culled

1 day - 29 May 2020 | Environment

Swakopmund • [email protected] elephants that posed a risk to human life and agriculture were culled in various regions of the country last month.According to the...

Educating the youth through television...

1 day - 28 May 2020 | Youth

Walvis Bay • [email protected] Long-time best friends and entrepreneurial partners Jörg Walter (20) and Bryan Nakambonde (20) will soon be premiering an educational television...

Brand laat 30 dakloos

1 day - 28 May 2020 | Disasters

Swakopmund • [email protected] Dertig Swakopmunders is haweloos gelaat ná hul plakkershuis in Mondesa afgebrand het.Die vyf gesinne wie se huisie deur vlamme verswelg is,...

African Vocals sing online

1 day - 28 May 2020 | Art and Entertainment

Swakopmund • [email protected] Vocals held an online concert at the Lutheran Church in Swakopmund on Sunday, streaming it live on their Facebook and Instagram pages....

Load More