FNB Residential Property Report


First Quarter 2020


·House Price Index was down 5.9% from the first quarter of 2019 to the first quarter of 2020

·Volume index growth in the northern region, out performs-registered an astounding growth of 26.8%y/y

·National average property price is now recorded at N$1 038 577

·Overall delivery of serviced land improved by 44% y/y at the end of March 2020 compared to 3% recorded a year ago

First Quarter House Prices Tumble Further

The FNB House Price Index posted a contraction of5.9%y/y at the end of March 2020 compared to a contraction of 1.5% recorded over the same period of 2019. This brought the average national house price to a 5-year record low of N$1 038 577 as at March 2020. Although overall house prices in the central and coastal regions have remained buoyant, registering growth o f8.2%y/y and 7.2%y/y over the first quarter respectively, this was overshadowed by steep contractions of 18.7% y/y and 13.6% y/y recorded in the northern and southern regions respectively. House price contractions in the northern and southern regions were observed in the small housing segment, while the small and medium housing segments were responsible for price growth in the central and coastal regions. While we continue to view affordability of houses in the large and luxury segments as a stumbling issue, we see deferment in buying decisions in anticipation of a further drop in prices and an improvement in the delivery of land as some of the themes shaping the outlook for the residential property market.

The overall volume index also rebounded significantly by 2.0% y/y from -24.4% y/y in the prior quarter. However, this remains much lower than the 37.9% y/y growth recorded over the same period of 2019. We view the increasing concentration of transaction volumes in the small and medium segments and the emerging inverse relationship between overall price and volume growth as indicative of properties selling at prices below valuation.

Central residential property prices grew by 8.2% y/y in the first quarter of 2020 compared to a contraction of 13.8%y/y recorded over the same period of 2019. A house in the central region is now priced at N$1 353 000. On a 12-month rolling average, a house in Windhoek is now priced at N$1.2m, having contracted by 0.4% q/q and 15.9% y/y. Alongside, a house in Okahandja and Gobabis is now priced at N$709K and N$679K,respectively.

Demand in the central region has rebounded albeit at a slow pace, with the volume index showing a contraction of 9.4% y/y in 1 Q 2020 compared to a contraction of 15.9%y/y in the prior quarter and growth of 39.4% y/y in 1Q2019. This was largely driven by the medium segment which registered a volume index growth of 8.2%y/y compared to a contraction of 40.0% recorded in the prior quarter and 10.0% y/y over the same period of 2019. Meanwhile, demand in the small, large and luxury housing segments under performed, posting contractions of 10.7%, 0.1% and 2.1% y/y, respectively.

The coastal region recorded house price growth of 7.3%y/y in the first quarter of 2020 compared to 9.7% y/y recorded a year ago. The average house price in the coastal region is now recorded at N$1 119 000. Although overall property prices in this region remains in positive territory, the average annual house prices in Swakopmund and Walvis Bay have been on a downward slope, with the first quarter price recorded at N$790k, N$740K compared to N$1.1M and N$879K recorded over the same period in 2019, respectively.

As observed in the central region, the medium housing segment has sustained overall price growth in the coastal region, advancing a 5-year record growth of 25.6% y/y in the volumes. Anecdotally, this is indicative of homeowners opting to sell their properties at prices below valuation as demand dwindles against the backdrop of a depressed economy.

Northern house prices have continued to weaken, posting a 4-year record contraction of 18.7% y/y at the end of March 2020. The average house price in the Northern regions is now at N$749K. The significant drop in prices were more evident in Ongwediva, Oshakati and Ondangwa,which contracted by15.8%,15.0%and 8.2% y/y,respectively.

Although demand in the northern region seems to have fallen off the cliff as of mid-2019, this has since been reversed at the start of 2020.In effect,the volume index grew by 26.3% y/y. This is the only region that has registered growth in trading volumes. This was nonetheless accounted for by the small housing segment, which recorded a staggering growth of36.8% y/y and making up about 65% of overall transaction volumes in this region.Hence, the net effects on overall price growth continue to disappoint on the downside. The large housing segment also registered a sizeable growth of 14.2% y/y in volumes traded. However, this segment constitutes only a very small fraction (3%) of overall transactions recorded in this region.Conversely, transaction volumes recorded under the medium and luxury housing segments contracted further by 33.1% and 50.0% y/y, respectively–atrend that has sprawled out since mid-2019.

The southern region which is predominantly characterized by the small housing segment recorded a contraction in house prices of 13.6% y/y compared to a growth of 15.9%y/y recorded a year ago.The observed large variations in price and volume growth over the years in this region appears to signify a slow pace of development and minimal trading activity in the region. In effect, the southern index posted a contraction of 6.3% y/y at the end of March 2020 compared to a contraction of 0.3% y/y recorded over the same period of 2019. However, given the notable acceleration of land delivery in the region (see Appendix B), the southern residential property market may be poised for advancement when viewed from along-term perspective.


The number of ervens made available in urban areas have improved drastically over the first quarter across all the regions (see appendix B), with overall growth in trading activity increasing by 44% y/y at the end of March 2020 compared to 3% y/y realised as at March 2019.

While we view the current monetary policy environment as accommodative as far as easing financial pressure on existing mortgage bond holders is concerned, this may not be sufficient to effectively address the affordability and housing backlog in the country. In essence, this will likely drag the already indebted households into unsustainable debts under the current economic and property market conditions. Further acceleration of land delivery, therefore, remains a critical policy imperative in bringing about stability in the market.


The flurry of trading activity in the small and medium housing segments is becoming a new normal in the Namibian residential property market. This could be ascribed to affordability issues and inherent high levels of income in equality that are compounded by a smaller population. Henceforth, whether property investment is still regarded as Safe Haven in the context of current economic conditions is becoming a recurring theme. The outlook for property prices looks bleak from a market perspective as wide spread job losses and income uncertainty induced by COVID-19 do not bode well for demand. Although data contained within this report is unlikely to reflect the economic impact of COVID-19, second quarter activity will likely print lower home sales figures, which may exert further downward pressure on price growth. This is because of sales cancellations experienced due to lock-down and subsequent closure of the Deeds Office in April. Furthermore, the notable improvement in land delivery for housing is poised to keep residential property prices at bay as potential new house owners sees a penetrative market opportunity through purchasing of land.


Source - FNB Namibia