By Lahja Nashuuta
Windhoek – For years, Namibia’s real estate industry has spent hundreds of millions of rand building large-scale developments, mostly high-end rental apartments, to take advantage of the property boom in the capital, Windhoek.
Tables are, however, turning and apartments are becoming increasingly unpopular among middle-income earners, who yearn for affordable houses.
There is a high demand for cheaper housing in Namibia and property developers appear to have taken notice. Several housing developments have sprouted on the periphery of Windhoek, with stand-alone houses offered at relatively low prices.
Local property developer, Preferred Investment Property Fund, is developing the Osona Village housing project, 55km north of Windhoek at a cost of R230 million.
The 1,100-hectare project is being funded by the Government Institutions Pension Fund (GIPF) under its unlisted investment programme for the construction of 1,500 affordable houses.
Prices for stand-alone houses range from R395,000 for a one-bedroomed house to R475,000 for a two-bedroomed house.
Many home seekers have already bought houses at the Osona Village, but are still lamenting high prices.
“The houses are expensive. My house is a three-bedroomed and my monthly instalment is about R9,000 that excludes water and electricity as well as the alarm,” said Aune Kapelwa, who works for the Namibia University of Science and Technology and bought the house last year.
She further lamented the size of the rooms and the yard, which she says are very small and some houses have no space for a garage.
Relocating to housing developments outside Windhoek, like the Osona Village, also comes at an inconvenience, as it disrupts schooling for the children. Hence, residents at Osona are appealing to the government to consider building schools at such locations.
The majority of the buyers are employed in Windhoek, and transport cost is one of the barriers for people who have relocated to Osona, which is 10km from Okahandja.
Kapelwa, however, stressed that there is a need for reducing prices to afford the low-income earners the opportunity to own a house.
Maria Kakololo, a staff member of the Namibia Broadcasting Corporation, is also a resident of the village after she bought her house earlier this year. Kakololo is, however, fortunate that her employer pays 40% of her home loan. Her monthly instalment for a three-bedroomed house, which is valued at R850,000, is R3,700, while ordinarily she would have been expected to pay about R8,000 monthly instalments.
Private property developers have been accused of targeting the low-housing segment, motivated by profits, rather than to help solve the housing crisis.
However, Raymond Eales of GPM Engineering Consultants and one other consultant involved in the development of Osona Village said they are genuinely committed to providing low-income earners with an opportunity to own upmarket houses.
“Private developers are motivated by profit and the majority of them will do everything to ensure that they charge the highest prices. The behaviour of these developers contributed to the unjustified increase in the price of houses in Namibia. In fact, going forward, the government must make sure these developers are regulated to stop them from exploiting the vulnerable and poor uninformed low-income earners,” said Martin Mwinga, the executive chairman of First Capital Namibia.
Mwinga said affordable housing in the Namibian case are houses between R300,000 to R400,000, which is still beyond the reach of many.
Namibia has one of the most developed housing finance sectors. However, there is a general perception that commercial banks are hesitant to provide housing finance to low- and middle-income earners.
Mwinga explained that lenders in the housing market normally provide housing loans of up to 33% of the borrower’s gross income – meaning the borrower’s instalment for servicing the home loan should not exceed 33% of their monthly income.
“Low-income earners generally spend close to 70% of their income on food and expenditure to satisfy their basic needs. In addition, the majority in this income bracket are indebted and have to service their short-term debts from cash-loans.
“When lenders assess the low-income earners’ applications, most of these potential borrowers will not qualify because of the 33% benchmark rule and the fact that they already spent 70% of their income on food.
“In addition, the price of land from town councils is high and out of reach for these low-income earners. This excludes them from participating in the housing market,” he explained.
Chris Matthee, Executive Officer for Retail Banking Services at Bank Windhoek, emphasized the need to be fair and objective when assessing applications of all clients and to take into consideration affordability, additional income and clients’ needs.
“We also consider alternative building methods where it results in considerable cost-savings to our clients. Our consultants spend time with potential clients to advise them on what they need to consider when buying a property.
“In our view, the main reason for the housing needs of low-income earners not being satisfied is that there is a limited supply of housing they can afford. Access to serviced land by local authorities also adds to the issue,” Matthee said.
Housing in Namibia will remain unaffordable unless the authorities cut out the middlemen.
Regulating and supervising developers and contractors would also help.
Mwinga added that “Government needs to establish a regulatory authority for the housing market to help determine and regulate land and housing prices. In addition, Government must support the establishment of a specialised home loan lender to accommodate the needs of the low-income earners and those who cannot access funding from banks”.
Currently, the majority of Namibians cannot afford housing finance unless the government intervenes.
“Government having realised these market failures decided to intervene by establishing companies like NHE (National Housing Enterprises) that was supposed to provide low-cost subsidised houses and priced within the affordable range. But due to mismanagement and corruption, NHE failed to deliver on this noble government promise.
“To help low-income earners, the government of Namibia spent billions of dollars over the years giving grants to local authorities so that they can service the land and sell this land cheaply to low-income earners at affordable prices.
“Again these financial resources allocated by the government were mismanaged and abused by corrupt officials at the expense of low-income earners and taxpayers. In Namibia, most employers give subsidies to employees when they buy a house, for example, a low-income earner in government will receive a 60% subsidy on total instalment. If the house instalment is R5,000 per month, 60% of this amount will be subsidized by the government,” Mwinga explained.