Property prices: Swakop, Walvis under pressure
Growth in the average house price at the coast in August spent its 14th consecutive month in the red.
24 December 2018 | Economics
Namene Kalili; Group Economist; "FNB Namibia With more affordable land in the pipeline, coastal property prices have nowhere to go but down."
Releasing the FNB House Price Index this week, FNB Namibia group economist Namene Kalili said average coastal prices contracted for the 14th consecutive month in August. During the month under review, it fell by 10%.
The average house price at the coast in August was N$1.128 million, compared to N$1.479 million for the central region and the average of N$1.159 million for Namibia as a whole.
According to Kalili, relative demand at the coast was weakened by uncertainties in uranium, fishing and tourism sectors.
“Price pressures were scattered around the lower, upper and luxury price segments,” he said. Pressures were also associated with higher supply volumes, which pushed prices down.
“With more affordable land in the pipeline, coastal property prices have nowhere to go but down,” Kalili said. Land delivery at the coast in August was 14% higher than a year ago.
“However, price resistance is not too far away, around the level of N$1.051 million,” he added.
Walvis Bay has taken the biggest knock so far this year, with the average house price slumping 11.3%. Over a three-year period average price are down 7.7%.
Year-to-date, the average price in Swakopmund has dropped by 6.6%. However, it is still 5.9% higher measured over a three-year-period.
Henties Bay is the exception. Here the average price has increased by 13.4% so far this year. Compared to 2015, the average price is 2.3% higher.
In Lüderitz, the average house price has shrunk by 7.4% year-to-date. It is 48.8% higher than in 2015.
Annual gross domestic product (GDP) figures released by the Namibia Statistics Agency (NSA) last week show fishing and tourism are in a recession.
With growth of -10.6% in the third quarter of 2018, fishing spent its fourth consecutive quarter in negative territory. In the first and second quarters of this year, growth of -13.6% and -6.9% respectively were recorded.
In the third quarter of 2017, fishing grew by 8.6%.
Hotels and restaurants - a proxy for the performance of tourism - grew by -0.6% in the past quarter, also marking four consecutive quarters in the red. The sector grew by -7.2% in the first three months of 2018, followed by -3.9% in the second.
In the third quarter of 2017, hotels and restaurants grew by 5.6%.
Although still recording positive figures, mining’s growth dropped from 21.2% in the second quarter to 7.8% in the past one. Langer Heinrich, which was put on care and maintenance, contributed to the lower output.
Rio Tinto’s recent announcement that it intends to sell its entire stake of 68.62% in Rössing Uranium Ltd to China National Uranium Corporation Ltd (CNUC) also adds to uncertainty in the mining sector. The transaction still needs to be approved by the Namibian government and regulatory authorities like the Namibian Competition Commission (NaCC).