Rental market rebounds after two years

18 May 2020 | Economics

The FNB Rental Index for the first quarter of 2020 shows that overall residential rent prices rebounded from a two-year negative growth territory.
However, FNB Market Research Manager Frans Uusiku says that the Covid-19 lockdown is bound to paint a different picture when looking at quarter two of 2020.
“Although we reached a 12-month average growth of 0.0% at the end of March, bringing the national monthly average rent price to N$7 465, we know that the pandemic has disrupted business activity, resulting in job losses and reduced income for the most part of the labour force. This is bound to have a devastating effect on tenants and landlord cash flow going forward. We expect the rental market to hit a growth plateau in the second quarter before it reverts back to negative growth territory.”
When looking at the first quarter of 2020, the FNB Rental Index states that listed rental units were largely concentrated in the 1-bedroom and 2-bedroom segments, accounting for 43% and 32% of the overall listings, respectively.
Uusiku adds that these rental units were only recorded in Windhoek where the rural-urban migration is relatively high compared to other towns. “This observation continues to affirm the existing imbalance between the demand and supply dynamics in the housing market, particularly in the medium to higher-end of the market. The overall improvement in the rental index was driven mainly by the 2-bedroom and more-than-3 bedrooms segments, which grew by 3% and 2% y/y, respectively.”
Growth in deposits charged by landlords contracted by 32.1% y/y at the end of March 2020 compared to a growth of 11.8% y/y recorded during the same period of 2019. This brought the deposit to rent ratio to a 10-year record low of 5.8%. The last time Namibia experienced such a low deposit to rent-ratio was in 2009 during the global financial crisis.
The contraction was notable across all the four rental segments with the 1, 2, and 3-bedroom units contracting by 22.4%, 39.8% and 33.2% y/y respectively, while the more-than-3 bedrooms segment contracted by 28.1% y/y at the end of March 2020. This implies that upfront tenancy deposit is becoming less of a requirement due to stifling economic conditions.
In conclusion, Uusiku stated that the residential rental market had nearly evaded the negative growth territory, recording a 12-month average growth of 0.0% at the end of March 2020 compared to a contraction of 5.2% y/y recorded over the same period of 2019. He added that this was likely to be reversed by the COVID-19 pandemic and the associated implementation of nation-wide lockdown effective 28 March 2020.
“While the impact of the Covid crisis and lockdown is not yet reflected in the data, the stark reality is likely to be reflected in the second quarter with a potential growth reversal in rent prices expected, as landlords may be forced to negotiate for discounted rent to remain afloat.
“Although evictions are currently banned, tenants whose livelihoods are directly affected by the Covid-19 pandemic and lockdown will have limited or no income to pay up rent for the remainder of the lockdown period. All in all, the advent of this pandemic serves as a stark reminder to households and businesses to shore up their emergency funds to ensure that they are better prepared to survive unexpected future events.”

Similar News

 

What lies ahead for the real estate market?

1 month - 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...

Rent prices slip back into negative territory

2 months ago - 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...

Tax relief: The fine print

2 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

3 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

3 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

4 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

4 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

6 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

6 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

7 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

A closer look at chicken...

26th of January 10:00 | Opinion

Windhoek • Hanks SaisaiIn Namibia, chicken farming is an emerging venture that is on the rise, with a focus on producing table eggs and meat...

Fighting against hunger together

26th of January 09:29 | Social Issues

Besides causing a variety of devastating disruptions to livelihoods and economies worldwide, Covid-19 placed many countries in overwhelming levels of hunger, with the United Nations...

Exciting new opportunities for FemTech

26th of January 08:30 | Technology

DoBox and the Embassy of France announced the launching of the FemTech project to support the development of Namibia’s Female Tech Entrepreneurs.The project responds to...

New DAAD lecturer welcomed

17 hours ago | Education

The new lecturer of the German Academic Exchange Service (DAAD) in Namibia, Julia Gambadatoun, was welcomed by the Deputy Head of Mission of the German...

Nuwe asem vir Honda se...

18 hours ago | Motors

Kaapstad • Dirk GallowitzHonda het sy pragtige WR-V laat verlede jaar in Suider-Afrika bekendgestel met twee modelle, naamlik die intreevlak Comfort en ’n luukser Elegance...

Desert Classic winners head to...

18 hours ago | Sports

The Nedbank Desert Classic that took place at the Rossmund Golf Course late last year, attracted a full field of players that participated in the...

Nam boasts best roads again

19 hours ago | Infrastructure

For the fifth consecutive year, Namibia retained its position of having the best roads in Africa.According to the World Economic Forum’s (WEF) Global Competitive Report...

Go4Gold training programme kicks off

20 hours ago | Education

Despite trying times, Gondwana Collection Namibia is embarking on the third Go4Gold journey with twelve motivated and enthusiastic potential young leaders.This academy is structured around...

Groot planne vir jong skoolhoof

1 day - 25 January 2021 | People

Windhoek • [email protected] 1 Februarie, staan ’n jong vrou in groot skoene.Die 25-jarige onderwyseres, Tiandra Olivier, sal van volgende week die pos as skoolhoof van...

Load More