Africa-Press – Namibia. THE rental market is expected to become competitive in the coming months, with landlords making their properties more attractive to tenants without raising the rent.
This would be in an attempt to retain tenants amid the current high-inflation environment.
FNB Namibia’s market analyst and producer of the rental price index report, Frans Uusiku, says landlords could leverage on saving energy and water to reduce tenants’ costs.
This could make “their properties more attractive and affordable without necessarily having to sacrifice rental income,” he said.
Electricity costs are set to increase in July, although water has still been on the low.
In a report which covers the first quarter of the year, Uusiku says rent growth continued to rally consistent with upward inflationary pressures witnessed across the world.
The biggest increase in rent was seen in the market segment of properties with more than three bedrooms – a trend that has surfaced over the past 12 months.
In effect, the average rent for units with more than three bedrooms stood at N$19 329 at the end of March 2022.
This is the highest level on record and highlights a high retention rate in the multi-family rental market, implying tenants could be renewing their leases at relatively higher rates than before due to increased competition and a shortage of family apartments.
Overall, the 12-month average rental index growth stood at 0,6% at the end of March.
The 12-month national weighted average rent came was N$6 964 at the end of March – compared to N$6 926 a year ago.
“This continues to affirm the sustained recovery of the rental market and economy in general, supported by the mining, tourism and agriculture sectors.
“Despite the observed mild economic gains, we nonetheless view the erosion of affordability as a critical risk factor in this recovery path, on account of subdued real wage growth in the context of rising inflation,” Uusiku says.
The two-bedroom segment registered rental price contraction of 5,3% year on year to N$6 346 at the end of March 2022, while the one-bedroom and three-bedroom segments recorded rental price growth of 0,9% and 0,2% year on year to N$3 674 and N$9 657, respectively.
Looking ahead, Uusiku says rental prices will increase further even if house prices fall due to the rising cost of utilities and a lack of housing supply sparked by a buoyant sales market.
“Furthermore, the subdued real wage growth and rent-to-income ratio of about 39% would mean the majority of Generation Z would most likely prefer to still rent rather than buy a house due to the associated costs of owning and maintaining a house in a high inflation environment,” he says.
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