FNB Namibia Housing Index

Quarter 2: 2006

FNB HOUSING INDEX

Introduction

The original FNB Quarterly Housing Index which only covered the suburbs has since expanded to include five additional suburbs/areas that could not be included previously due to a lack of data. The five additional suburbs/areas are: Wanaheda, , Auasblick, Brakwater and Goreangab.

As a result of the additional suburbs/areas, which mainly consist of the low income areas, the index inevitably decrease. Hence, two indices were calculated in order to show the effect these additional suburbs have on the original index when included in the calculations. This effect is clearly visible in figure 1 as from Quarter 1 of 2006 onwards.

Other than Brakwater and Auasblick, all the additional suburbs/areas included in the Index are relatively lower income areas. Brakwater is becoming a relatively high value area since high income earners started to move towards this northern side of the capital as the current high income areas are becoming saturated. The ground-water problem in the south-east of Windhoek makes it impossible for the City of Windhoek to expand towards that area.

During this quarter, the highest sub-index was attained in Academia while Rocky Crest, Suiderhof and Cimbebasia were also amongst the suburbs with high indices. Despite a lower weighting being assigned to Suiderhof during Quarter 2 of 2006 (as a result of the inclusions of the five additional suburbs), the Suiderhof index managed to show a significant quarterly growth compared to other suburbs.

Authored by: Martin Mwinga & Alex Shimuafeni 1 Enquiries: Alex Shimuafeni, Tel: +264 61 2992890, Fax: +264 61 225 994, E-mail: [email protected] 5th Floor, First City Centre, Levinson Arcade, Windhoek

Table 1: House Valuations index per suburb (Windhoek)

Suburbs Indices Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Percentage of 2005 of 2005 of 2005 of 2005 of 2006 of 2006 change: WINDHOEK OVERALL 100.00 117.30 108.79 115.68 112.08 110.16 -1.7%

Academia 100.00 102.00 131.87 129.76 124.10 132.00 6.4%

Cimbebasia 100.00 95.92 95.35 60.90 112.11 125.27 11.7%

Dorado Park 100.00 105.09 112.69 108.83 124.00 112.31 -9.4%

Eros 100.00 103.83 108.30 108.30 104.36 119.10 14.1%

Hochland 100.00 97.17 103.62 105.06 106.25 112.36 5.7%

Katutura 100.00 98.29 102.36 120.02 119.07 118.68 -0.3%

Khomasdal 100.00 101.71 112.60 97.15 112.80 113.28 0.4% & Ludgwigsdorf 100.00 173.96 117.35 152.04 106.16 101.55 -4.3%

Kleine Kuppe 100.00 108.82 95.58 110.45 126.29 103.80 -17.8%

Olympia 100.00 90.42 80.67 92.53 113.41 99.37 -12.4%

Otjomuise 100.00 107.18 103.66 119.37 126.29 123.51 -2.2%

Pioneers Park 100.00 107.66 113.40 104.39 125.21 121.64 -2.8%

Rocky Crest 100.00 99.77 139.16 112.30 128.72 128.13 -0.5%

Suiderhof 100.00 100.11 111.40 111.40 105.51 126.14 19.6%

Windhoek West 100.00 73.27 96.41 96.41 127.73 96.07 -24.8%

Auasblick N/A N/A N/A N/A 100.00 110.65 10.6%

Brakwater N/A N/A N/A N/A 100.00 65.47 -34.5%*

Goreangab N/A N/A N/A N/A 100.00 99.71 -0.3%

Okuryangava N/A N/A N/A N/A 100.00 98.48 -1.5%

Wanaheda N/A N/A N/A N/A 100.00 98.13 -1.9%

* Since Brakwater is still in the development phase, the 34.5% decline in the index from Quarter 1 to Quarter 2 of 2006 is as a result of mainly some undeveloped land valuations being recorded during Quarter 2 of 2006. Customers who bought the land will in future develop the ervens and the sub-index will increase accordingly.

The overall decline in the index from 112 to 110, does not only reflect the inclusion of lower priced suburbs, but also reflects a possible cooling down in the housing market. The slowdown in the increase of house prices reflects the declining demand for residential properties, especially in the high income areas. This is most likely due to declining disposable income, following increases in inflation rate, interest rates and subdued economic growth.

Authored by: Martin Mwinga & Alex Shimuafeni 2 Enquiries: Alex Shimuafeni, Tel: +264 61 2992890, Fax: +264 61 225 994, E-mail: [email protected] 5th Floor, First City Centre, Levinson Arcade, Windhoek

Figure 1: Windhoek Index

Windhoek Overall Quarterly Index

120.00 117.30

115.00 113.25 115.68 113.76

112.08 110.00 110.16 108.79 Index 105.00

100.00 100.00

95.00 Q1 of 2005 Q2 of 2005 Q3 of 2005 Q4 of 2005 Q1 of 2006 Q2 of 2006

Revised (new inclusions) Old (no new inclusions)

Source: FNB Namibia Valuation data

Credit Growth to Residential Property Market (National)

For the year ending May 2006, the Namibian year-on-year demand for home loan credit increased with 22.8% which translates to an increase of N$ 1.9 billion. The quarterly increase (from March 2006 to May 2006) was 5.9% or N$ 568 million.

Figure 2: Home Loans and Total Advances Figure 3: Home Loans share as percentage of Total Advances

Home Loans vs Total Advances Total Home Loans share as percentage of Total Advances 30,000

43% 25,000

20,000 42% 15,000 41%

Millions 10,000 40% Percentages 5,000 39% 0 MAY 05 JUN 05 JUL 05 AUG 05 SEP 05 OCT 05 NOV 05 DEC 05 JAN 06 FEB 06 MAR 06 APR 06 MAY 06 38% MAY 05 JUN 05 JUL 05 AUG 05 SEP 05 OCT 05 NOV 05 DEC 05 JAN 06 FEB 06 MAR 06 APR 06 MAY 06

HOME LOANS TOTAL ADVANCES

Source: Namibian Commercial banks data Source: Namibian Commercial banks data

In response to declining economic activities and rising inflation, total private sector credit remained subdued during May 2006, registering a growth of 18.6%. Mortgage loans, which accounts for 64% of individual credit registered a growth of 36.1% in May 2006. With recent changes and further upward interest rate expectations, growth in mortgage loans is expected to remain at low levels of less than 20% toward the end of 2006.

Authored by: Martin Mwinga & Alex Shimuafeni 3 Enquiries: Alex Shimuafeni, Tel: +264 61 2992890, Fax: +264 61 225 994, E-mail: [email protected] 5th Floor, First City Centre, Levinson Arcade, Windhoek

Building Plans Approved and Completed (Residential & Commercial: National)

The positive trends from the following two graphs indicate that the Namibian construction industry is still active. However, annual growth in building plans passed and completed show a decline, with building plans completed growing by only 41% in the first quarter of 2006 compared to a growth of 60% in the same quarter in 2005.

Figure 4: Building Plans Approved

Building Plans Approved

550

500 494

450 414 400 400

350 377 350

N$ million 300

250

200

150 Q1 of 2005 Q2 of 2005 Q3 of 2005 Q4 of 2005 Q1 of 2006

Source: National Planning Commission

The annual growth in building plans completed increased by 35% in Quarter 1 of 2006, compared to a growth of 45% in the same quarter in 2006. This is a further possible demonstration in the decline disposable income.

Figure 5: Building Plans Completed

Building Plans Completed

290

270 266 254 250

230 219 210 N$ millions 197 195 190 170

150 Q1 of 2005 Q2 of 2005 Q3 of 2005 Q4 of 2005 Q1 of 2006

Source: National Planning Commission

Authored by: Martin Mwinga & Alex Shimuafeni 4 Enquiries: Alex Shimuafeni, Tel: +264 61 2992890, Fax: +264 61 225 994, E-mail: [email protected] 5th Floor, First City Centre, Levinson Arcade, Windhoek