Pace of housing construction slows
The pace of construction has been subdued, according to the latest building plans. This follows the number of building plans approved showing an almost 30% year-on-year (y-o-y) decrease, an assessment by IJG Securities found."The construction pipeline in Windhoek remains dull. A total of 170 building plans were approved by City of Windhoek in April, representing an 7.6% month-on-month (m-o-m) decrease, but a 29.8% (y-o-y) increase. The value of approvals, however, fell by 70% m-o-m from March’s high base and by 49.2% y-o-y to N$87.2 million," it said.
The figures painted a positive picture as far as activity in the housing market is concerned this year, IJG further noted.
"The year-to-date figures paint a slightly brighter picture with 462 plans approved so far in 2024, valued at N$623.9 million. This represents a 5.3% increase in the number of plans approved compared to the corresponding period last year, with a 68.3% higher total value. Most of the approved plans are for additions to existing properties, which are typically smaller, lower-value projects. Indeed, 78.3% of the total plans approved year-to-date are additions to properties, amounting to a total value of N$293 million, which is 47% of the total value of plans approved in 2024 so far.
"Conversely, commercial and residential buildings collectively make up 21.7% of the total number of plans approved year-to-date, but account for 53% of the monetary value, equivalent to N$331 million," the firm added.
According to IJG, the longer-term trend in number of approvals remains downward, with the 12-month cumulative figure of 1 894 plans down 16.3% over the same period a year ago, and the 12-month cumulative value of approvals up 8.7% y-o-y.
"The signed agreement between Swakopmund municipality and the National Housing Enterprise (NHE) for the construction of 805 houses for the DRC informal settlement is expected to have an economic impact, albeit small. The approximate total cost will range from N$76.5 million to N$170 million. However, the pipeline is projected to remain subdued from the private sector. Mortgage loans have become a significantly lower driver of private sector credit extension growth. This is due to the relatively high interest rates disincentivising the take-up of credit to build."