Rent prices slip back into negative territory

19 November 2020 | Economics

The FNB Residential Rental Index shows that the 12-month moving average growth in rent prices took a dip of -1.3% at the end of September 2020.
This brings the national weighted average rent to N$7 091 at the end of September 2020, compared to N$7 164 recorded over the same period in 2019.
“The sudden return of the rental index growth into negative territory affirms the pass-through effects of Covid-19 pandemic on the rental market,” says Frans Uusiku, FNB Market Researcher. “This is unsurprising given the notable job losses and reduced income for the most part of the workforce as the country implemented Covid-19 containment measures during this period.”
Government reported that 8 000 employees were dismissed during the first two quarters of 2020, compared to 950 employees dismissed over the same period in 2019.
Uusiku said the demand dynamics remain highly skewed towards the lower end of the market as affordability becomes increasingly challenging.
“In effect, the annual average rent price for a 1-bedroom and 2-bedroom unit grew by 1.0% and 0.5% y/y, respectively to N$3 600 and N$7 006 as at September 2020. Conversely, the 3-bedroom and more-than-3 bedrooms units recorded annual contractions in rent price of 1.5% and 8.2% y/y respectively to N$9 937 and N$16 657 at the end of September 2020.
“Generally, tenants tend to move in with family or share with friends in tough economic times, and this reduces the overall demand for rental units. This results in landlords offering reduced rents, not only to retain quality tenants but also to achieve the desirable level of occupancy to remain afloat. We see the emergence of this theme playing out in the Namibian rental market particularly in the high-end segment,” Uusiku added.

At regional level
In the regions, growth in rent prices remained bleak in towns where Covid-19 induced retrenchments have been reported – mainly due to the relative dominance of industrial and hospitality related sectors.
More specifically, Walvis Bay continues to bear the brunt of a deeper contraction in rent prices of 43.9% y/y, followed by Ondangwa (-30.3% y/y), Rundu (-20.5% y/y), Oshakati (-17.0% y/y), and Windhoek (-2.0% y/y). The only towns that have spurred growth in rent prices are Ongwediva and Okahandja with 5.2% and 4.3% y/y, respectively.
Looking ahead, Uusiku says: “The shortage of quality tenants is likely to remain an issue as the economy continues to grapple with the protracted economic recession. This signifies the dawn of a renter’s market - one that would compel landlords to offer competitive rates, especially in the upper market areas. That is to say, offering a discount of between 15% - 20% of the advertised rent.
“Meanwhile, we retain our view that the dynamics around the adoption of remote working and multi-family renting cultures are likely to be one of the key defining features of demand and supply forces in the rental market as the global community anticipates the resurgence of the second wave of Covid-19 pandemic,” Uusiku concluded.

Similar News

 

Safety first at GIPF

3 weeks ago - 01 February 2021 | Economics

The Government Institutions Pension Fund (GIPF) announced the temporary suspension of the Biometric Verification process due to COVID-19 regulations. This applies to all members (pensioners,...

What lies ahead for the real estate market?

2 months ago - 08 December 2020 | Economics

As we near the end of an unprecedented year, Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, looks ahead and predicts yet...

Tax relief: The fine print

3 months ago - 10 November 2020 | Economics

In a media release on 4 November 2020, the Ministry of Finance announced a relief to taxpayers with outstanding balances, with effect from 1 February...

Repo rate remains unchanged

4 months ago - 21 October 2020 | Economics

The Bank of Namibia (BoN) announced that the repo rate would remain unchanged at 3.75%, governor Johannes !Gawaxab said at the Monetary Policy Announcement in...

GIPF invests in home-grown asset management companies

4 months ago - 21 October 2020 | Economics

The Government Institutions Pension Fund (GIPF) announced the introduction of its incubation assets management programme, which commenced in 2019.The programme aims to address the need...

GIPF says investments safe

5 months ago - 17 September 2020 | Economics

The Government Institutions Pension Fund (GIPF) said that it is aware of the de-registration of the Baobab Capital (Pty) Ltd (the fund manager) and Baobab...

GIPF shares info on local investment ecosystem

5 months ago - 01 September 2020 | Economics

The Government Institutions Pension Fund (GIPF) recently held a half day workshop in the capital to educate media practitioners on the investment ecosystem and to...

Home budgeting lessons from lockdown

7 months ago - 22 July 2020 | Economics

If lockdown has taught us anything, it is the importance of sticking to a budget and having emergency savings available should the unforeseen happen.This can...

How agent fees can lead to a bigger profit

7 months ago - 08 July 2020 | Economics

The impact of Covid has been felt across all sectors of the economy, resulting in high levels of unemployment and reduced household income levels.Selling a...

Budget and more in the spotlight

8 months ago - 18 June 2020 | Economics

Finance minister Iipumbu Shiimi said that he is content with the response he has seen from all Namibians from both the private and public sector...

Latest News

Big day for ALI

6 hours ago | Education

FNB, through the FirstRand Namibia Foundation and the African Leadership Institute (ALI) recently celebrated the 100th group of leaders who completed their training and received...

A dream becomes a reality

7 hours ago | Education

Green Enterprise Solutions shared that one of its longest-serving employees, Emilia Hangula, has earned her Diploma in Pre-Primary Education through the Institute of Open Learning...

Bass Angling season kicks into...

7 hours ago | Sports

The Namibia Bass Angling Association (NBAA) began its 2021 fishing season with two Bank Windhoek National Angling Competitions at Lake Oanob outside Rehoboth recentlyThe two-day...

‘Powerful, with exceptionally mastered techniques’

7 hours ago | Art and Entertainment

The Bank Windhoek Triennial received 277 submissions of which 96 are from the capital, while the remaining 181 are from artists around the country. The...

'La Niña responsible for seal...

10 hours ago | Environment

Swakopmund • [email protected] have now established the reason for hundreds of female Cape fur seals aborting their foetuses during the last months of 2020.The research...

Come bowl along

1 day - 23 February 2021 | Sports

After successfully hosting the first leg of its 2021 national league, the Namibia Bowling Association (NBA) is calling on Namibians to join the sport of...

Boost for Hep E

1 day - 23 February 2021 | Health

The health ministry received a donation of Hepatitis E and Hepatitis A virus testing supplies from the government of Japan to help intensify the ministry’s...

Pandemic curbs hepatitis-E

1 day - 23 February 2021 | Health

Windhoek • [email protected] years after a hepatitis-E outbreak was declared in Namibia that has killed dozens of people, the response to the Covid-19 pandemic has...

Fairy circles: The puzzle solved?

1 day - 23 February 2021 | Environment

Swakopmund • Erwin LeuschnerIn Angola, Namibia and South Africa there are large tracts that resemble a landscape full of freckles or craters. The cause of...

Load More