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RENTALS are down again, as people's preferences have changed from renting to owning properties.
Property prices are also at their lowest, leaving a market full of landlords seeking for tenants.
A recently released FNB Rental Index confirms this.
In it, it is reported that rental advertisement volumes, which indicate the availability of properties in the market, almost doubled on a quarterly basis, increasing by 80% to 5 058 units in the third quarter of 2020 compared to the preceding quarter.
Additionally, the national weighted average rent price is now also down to N$7 091 at the end of September 2020 compared to N$7 164 recorded over the same period in 2019.
FNB's analyst Frans Uusiku said this tells of what is happening, “[it] could partly be attributed to cancellations of rental contracts due to affordability issues and the advent of the narrative that owning a property instead of renting is increasingly seen to be gaining traction as house prices tumble”.
He said while the above is true, demand for rental properties, on the other hand, was still high, especially for one- and two-bedroomed properties.
“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,” said Uusiku.
A regional review shows that rent prices have 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% year on year, followed by Ondangwa at 30,3%, Rundu 20,5%, Oshakati 17%, and Windhoek 2%.
The only towns that have spurred growth in year-on-year rent prices, according to the index commentary are Ongwediva and Okahandja with 5,2% and 4,3%, respectively
On deposits, tenants are still not putting up 100% deposit as in the past.
Uusiku said overall deposits charged contracted by 23,8% year-on-year at the end of September 2020 compared to a contraction of 30,8% y/y recorded during the same period of 2019.
“This highlights an oversupply in rental properties on the back of weak tenancy demand and the growing relevance of a multi-family renting culture. As a result, the deposit to rent ratio worsened to record lows of 5,2% – further pointing to the deteriorating state of the Namibian economy,” he said.
It does not look like the Namibian property market is likely to get better anytime soon.
“Looking ahead, the shortage of quality tenants is likely to remain an issue, as the economy continues to grapple with the protracted recession,” said the analyst.
Uusiku added that this further signifies the dawn of a renter's market – one that would compel landlords to offer competitive rates, especially in the upper market areas.
Business Journalist at The Namibian