Land scarcity continues to drive pricesProperty prices don’t have much more room to grow, independent researchers say, as even the cost of renovations is becoming prohibitive. Affordability a growing concern for construction Namibia’s current subdued economic position extends to the performance of the construction sector, as attested by the latest report on building plans from IJG-Research.In Windhoek 177 building plans were approved in August, bringing to 1 141 the total number approved since January.
Although the value of those plans, at N$1.4 billion, was just N$6.4 million (0.5%) lower than the same time last year, the number of plans was significantly lower than the 1 759 approved in the first eight months of last year.
“The slowdown in the number of building plans approved has been largely driven by a lack of serviceable land in Windhoek, as opposed to the popular belief that water restrictions in the Khomas Region have been the causal factor,” the IJG researchers said in their report.
“Furthermore, there has been no water restrictions imposed on construction activities around Windhoek. The municipality has indicated that there is a high demand for land, but little land left around Windhoek that can be developed,” they said.
The majority of building plans approved in August were for additions to existing structures, with 935 such plans approved by the end of August.
That was 439 fewer plans than at the same time last year and 466 less than the average year-to-date figure for the past ten years.
Plans for new residential units approved from January to August amounted to N$324.8 million, more or less in line with the N$339.8 million approved over the same period in 2015.
Commercial units approved so far in 2016 amounted to 55, compared to 98 units last year. In terms of value, the approved plans amounted to N$372.5 million, compared to N$410 million in 2015.
“Anecdotal evidence suggests that the lack of available land has contributed to a large extent to the number of additions applied for over the last 158 years, as well as limiting the amount of new plans applied for,” the research states.
As lack of supply has caused property prices to rise, the team suggests more people have started living under one roof, promoting renovations and additions to existing buildings.
“Children stay with their parents longer, and families accommodate members who cannot afford to rent.”
And under current conditions, they say even opting to renovate can be more costly than before.
“The fact that we have seen a steady decline in additions on a cumulative basis over the last two or so years suggests that value addition to existing properties has become significantly less affordable and that the gains from such additions are now much less pronounced than before.
“In the past, the lack of available land has driven increases in property prices, but the limit of affordability is currently being tested, and thus property prices are unlikely to increase at the accelerated rate seen previously,” the IJG report states.
DENVER ISAACS
