The latest Housing Index by First National Bank, for the second and third quarter of 2007, indicates that high interest rates have begun affecting mortgage advances. There are also concerns that the trend may continue beyond the first or even the second quarter of 2008. The report shows a plunge in year-on-year growth to 17%, from 20% in the corresponding period of 2006.

“The affordability of housing will diminish further with rising debt servicing cost as consumers are already financially stretched,” said the report.
The report is only covering Windhoek. The National Housing Index, which covers the entire country, is due to be release late next month.
Yet the high interest rates seem not to have affected houses in lower income band, houses whose value is below N$500 000. Sales for these houses picked up to record positive growth during the period under review.
The trend is noted in the area of Katutura, Cimbebasia, Goreangab and Rocky Crest. “[These suburb] have maintained positive growth over a longer period relative to more expensive suburbs,” said the report.
In stark contrast, such luxurious suburbs as Klein Kuppe and Pioneerspark recorded negative growth, leading to the report attributing the declines to high interest rates.
“Similar trends are visible in the South African housing market as well,” noted the report.