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