Namibia-Housing - For many Namibians the right to shelter is increasingly becoming a distant pipe dream, as the non-availability of land continues to make it impossible for many low-income Namibians to own houses. The situation has been deteriorating for the past five years, according to analysts and is forcing people to resort to renting property.

Unfortunately for those unable to afford decent rental, makeshift shacks in the informal settlement are the only affordable options to rent shelter.

Bank of Namibia (BoN) chose housing as the topic for its annual symposium, with the title 'Housing in Namibia has the situation changed 21 years after Independence.'

The symposium comes at a time when affordability of housing dominates news media, with revelations of shrinking in the number of first time buyers.

Property developers are making a killing in residential properties, where house prices are 30 percent above the building costs, while the size of erven get smaller as prices go up.

The scarcity of land has home seekers competing for the very limited available houses, and the market is also full of speculators who want a share of the fortunes to be gained from the market this moment.

According to analysts, a comparison with housing inflation shows that "house prices are accelerating at a much faster pace than building material, which indicates that housing suppliers are making higher profits from the scarcity".

An assessment of available information and figures suggests that the cheapest house in the market is priced at about N$260 000.

However, the cheapness is relative as to acquire such a house, the person should have an annual net earning of about N$90 000 per annum, or about N$7 500 every month.

Acquiring a mid-sized house with a price tag of about N$500 000, a buyer needs an annual income of more than N$200 000, which is a monthly income in excess of N$15 000.

According to the First National Bank (FNB) Housing Index, a quarterly analytical publication, thus far the only authoritative voice on the property market, municipalities are unable to cope with demand for erven for houses to an extent that some municipalities such as Windhoek are only giving between 10 percent and 20 percent of the erven required every year.

Only the coastal municipalities, along with northern towns, have been found to be coping well with land delivery at between 50 percent and 75 percent.

Nevertheless, there is a caution that the increase in both prices and delivery of houses currently taking place in the northern towns could "suggest that demand continues to outgrow supply as house prices have begun accelerating, particularly in the lower price segment".

"The house prices have accelerated substantially over the past year. Scarcity is the biggest driver, which is aggravated by speculators. Windhoek alone needs 300 new houses each month yet a mere 300 erven have been sold in the past 12 months," Namene Kalili, the manager for research and intelligence at FNB Namibia, commented to New Era last month on the August 2011 FNB Housing Index.

As a result, Namibia's home rental market is tearing at the seams, as housing prices escalate to non-affordability levels, forcing Namibians to rent the available tiny accommodations.

While this might be good for property owners renting out flats and houses, it is certainly not good news for people in need of accommodation who now have to pay more in monthly rental fees.

Available figures indicate that rental inflation for residential properties has gone up 12 percent year-on-year, with more inflationary pressure expected to manifest itself towards the end of the year as the increases in electricity and water take their toll.

"Persistent under delivery of entry level housing units continued to send central house prices through the roof and thus depress volumes nationwide. So much so that first time buyers are becoming fewer and fewer and are resorting to the rental market," commented the August 2011 FNB Housing Index.

It is further noted that homebuyers are increasingly paying more for houses that are becoming smaller in space.

The report noted higher price per square metres with Windhoek recording the highest per square metre price in erven of smaller houses at N$666, compared to N$411 in the north and N$481 at the coast.

In the southern towns the price is N$251 per square metre. Windhoek remains with a serious problem, even though it now has frequent auctions for erven, with the report suggesting that "these properties have not been mortgaged eight months after the auction, alternatively they could be financed with unsecured debt which attracts higher repayments which ultimately delay actual construction work, which would explain the low construction numbers, which ultimately contribute towards the escalating house prices".

It is only a drastic improvement in land supply that would level the playing field between buyers and sellers, after which there would be a visible reduction in house prices.

Desie Heita

New Era/28/09/2011