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Namibian Housing Market
By Namene Kalili
Structure
• Basic housing facts/projections
– Household composition
– New housing demand
– Modern housing delivery
– NHE housing delivery
– Improvised housing
– Housing distribution
– Consumers under pressure
– Mortgage advances
– Summary
• House Price Index
– Methodology
– Trends (Causes)
• Housing Bubbles
– Jean-Paul Rodrique Model
– Where we are on the bubble curve
– Easily misleading conclusions
Basic Housing Facts
Changes in Household Composition
5.7
4.94.7
4.4
0
1
2
3
4
5
6
1993/1994 2003/2004 2009/2010 2015/2016
People per household
New Housing Demand
63,426 65,117
80,853
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2003/2004 2009/2010 2015/2016
New households
Modern Housing Growing at 4.9%pa
95,483
138,264
180,833
202,400
0
50,000
100,000
150,000
200,000
250,000
1993/1994 2003/2004 2009/2010 2015/2016
Modern houses
NHE Housing Delivery
626
837
614 617
466
1,303
776818
340
164
267
798
890
551
718
442 435
816750
866
353
147
313
152 129
204
91
330372 376
575 568
1,399
0
200
400
600
800
1000
1200
1400
1600
1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Improvised Housing Growing by 14.2%
24,483
61,699
102,210
140,110
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
1993/1994 2003/2004 2009/2010 2015/2016
Shacks
Housing Distribution
29.6%
5.6% 5.5%
2.1%
28.8%27.0%
1.4%
0%
5%
10%
15%
20%
25%
30%
35%
Detached Semi detached Apartment Singlequarters
Traditional Improvised Other
Food1.2
Food1.0
Food2.1
Housing1.0 Housing
0.7
Housing2.1
-1
0
1
2
3
4
5
6
7
8
2010 2011 2012 2013 2014 2015 2016-5
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Consumption
GNDI
Consumers under pressure
GNDI slowing consumption growth Rising inflation
Interest rates may lift further Rising DTI a concern
0
2
4
6
8
10
12
14
16
2001 2003 2005 2007 2009 2011 2013 2015 2017
Repo Namibia Repo South Africa83.8%
92.1%
-5%
0%
5%
10%
15%
20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2007 2009 2011 2013 2015 2017 2019
Comp DTI (LHS) HH income growth (RHS)
Consumers Tapping Into Savings
-100
-50
0
50
100
150
200
-6
-4
-2
0
2
4
6
8
2003 2005 2007 2009 2011 2013 2015
Savings
Repo
Deposit
Mortgages
0
5
10
15
20
25
30
35
40
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Business Individuals
Forecasts•Gradual decline•Limited construction•Rising interest rates•Rising unemployment•Business confidence
Summary
• Falling household size
• Rising housing demand
• Weak housing delivery (4.9% pa)
– NHE
– Tipeeg
– Mass housing
– Harambee prosperity plan
• Rising improvised housing (14.2% pa)
House Price Index
Index Methodology
• Collect from Deeds Office
– Hard copy
– Bonds
• Bonded value
– Exclusions
• Further bonds
• Transactions under N$100k (2007)
• Cash transactions
• Sectional bonds
• Rehoboth transactions
• 60,672 Data points
• Use medians because of high income inequality
• Weight by area (2007)
• Supported by quarterly EAS
FNB House Price Index
R770R808
R743
R975
R780
R1,097
R959
-10%
0%
10%
20%
30%
40%
50%
400k
500k
600k
700k
800k
900k
1,000k
1,100k
1,200k
Th
ou
sa
nd
s
Overall House Prices
Regional Downward TrendCentral Property Market Coastal Property Market
Northern Property Market Southern Property Market
R633R656
-20%
-10%
0%
10%
20%
30%
40%
50%
300k
350k
400k
450k
500k
550k
600k
650k
700k
Th
ou
sa
nd
s
Northern House Prices
R1,174
R969
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
400k
500k
600k
700k
800k
900k
1,000k
1,100k
1,200k
1,300k
Thousands
Coastal House PricesR1,318
R1,097
-20%
-10%
0%
10%
20%
30%
40%
50%
400k
500k
600k
700k
800k
900k
1,000k
1,100k
1,200k
1,300k
1,400k
Th
ou
sa
nd
s
Central House Prices
R756
R646
-50%
0%
50%
100%
150%
200%
0k
100k
200k
300k
400k
500k
600k
700k
800kT
ho
usa
nd
s
Southern House Prices
Housing Bubbles
Jean-Paul Rodrique Bubble Model
Where Are We On The Bubble Curve
Easily misleading……
• Household indebtedness
• Slowing economy– Fiscal consolidation
– Commodity prices
• Negative employment growth
• Falling disposable income– Negative employment growth
– 150bps rise in interest rates
– High interest rates
• Increased supply outstanding
• Change in policy environment– BoN deposit requirements on secondary properties
• Poor banking sector liquidity– Securitization creeping into the market
– The last straw in the housing bubble of 2007
The Way Forward
• Densification
• Increase housing delivery
– Social segment (82,000 units)
• Inclusionary developments
• Government subsidies
• Under the SDFN model
– Low income segment (42,000 units)
• Inclusionary development
• Scaled up SDFN structure
• 50% Government subsidy on top structure
– Middle income segment (9,000 units)
• Core housing
• 100% commercial basis
• Cost government N$7.9bn to implement