Chart of the Week
The property market has seen little growth since the economic downturn began in 2015/16.The national rental index, reflecting average rent charges, has largely stagnated since 2016 and subsequently fluctuated around those levels.
When adjusted for inflation, this indicates that the real value of average rents decreased to about 68% of their 2016 levels, says Cirrus Capital equity associate Adrian Gläser.
The national housing index, which tracks average house sale values, performed slightly better. It stands only 11.5% higher than at the start of 2016, translating to a compounded annual growth rate (CAGR) of 1.26%. However, this growth is still well below inflation and significantly trails behind regional and global trends.
With Namibia's economy now experiencing sustained growth — marked by 12 consecutive quarters of real GDP expansion — and several positive indicators emerging, the local property market looks bound to pick up over the medium term.
Additionally, rising costs for raw materials and labour have driven the replacement cost of existing properties to, at times, double the current market prices. This makes purchasing property more economical than building new property.
Consequently, property values will need to increase before significant new developments can occur and more stock is added to the market.
Seeing increased and growing rental demand amid limited supply should lead to higher rent charges, helping them catch up with inflation-adjusted levels from previous years and boosting property values in turn.