Namibians Spend At Least 39 Percent of Income On Rent
The average Namibian spends an estimated 39% of their income to pay rent. This is a serious concern for rental affordability, a recent FNB Namibia residential report has noted.
“Affordability remains an issue,” reads the report which covers the third quarter of 2021.
Authored by research manager at FNB Frans Uusiku, the report states that although rental markets across most advanced economies are on a path of recovery due to the resumption of ‘normal life’, Namibia remains left behind.
Uusiku blames the low pace of Covid-19 vaccination and job growth, which could push rentals to become “farfetched in the Namibian market context”.
In the report, the national weighted average rent was N$6 790 at the end of September 2021, from N$7 061 a year ago.
Despite the slight dip in rental prices, demand fundamentals remain relatively weak in the local economy.
“This is evident in the FNB Residential Rental Index which has retained an annual contraction of 2,3% at the end of September 2021, from the preceding quarter, which is still worse than the -1,3% seen in September of last year,” he said.
Uusiku added that the continued deterioration of the residential rental market also appears to highlight easing competition pressure within the single-family market due to limited inventory of affordable housing.
“This is particularly true for the central region. Most notably, the 2-bedroom and 1-bedroom segments recorded the largest rental contraction of 1,5% and 1,1% year-on-year to N$6 512 and N$3 583, respectively” he said.
Windhoek remains the biggest residential rental market, accounting for 92% of rental listings year-to-date.
Uusiku said this, nonetheless, reflects a marginal decrease from 92,4% and 95% in 2020 and 2019, respectively – which may explain the rising prominence of the coastal and northern regions as potential jurisdictions for holiday homes.
The 12-month average rent in Windhoek contracted by 5% year-on-year and 2,2% quarter-on-quarter to N$6 700 at the end of September 2021.
“Even so, this remains the smallest contraction observed in rents across the towns under review. However, some suburbs in Windhoek have seen real pressure on the supply of rental properties, especially during the pandemic. This could be due to the emergence of semigration or some households opting to work from other towns as organisations adopt flexible working arrangements,” he said.
The recovery of the residential rental market appears to have flatlined, with the sector now characterised by weak demand, increased vacancies and negative rental growth across the board.
Cyclical forces such as weak demand fundamentals are believed to be at the centre of these dynamics, he noted.
By Namibian.
