Author Archives: IJGResearch

New vehicle sales – July 2016

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A total of 1,570 vehicles were sold in July, 1.2% less than the number of vehicles sold in June and 18.8% down compared to the number of vehicles sold in July 2015. Since January this year, 10,437 vehicles have been sold, down 19.3% from the number of vehicles sold over the comparable period last year. Vehicles sales is currently trending down on a year-on-year basis. This suggests that this trend is likely to continue going forward.

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For the past 12 months, the number of vehicles sold on a cumulative basis in Namibia has been declining, posting negative since December 2015. On a 12-month cumulative basis, 18,747 vehicles were sold up to the end of July 2016, 16.5% less than the number of vehicles sold over the same period last year and 1.9% less than the cumulative number of vehicles sold in the 12 months to June this year.

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On a monthly basis, total passenger vehicle sales rose by 1.6% to 653 in July. On an annual basis however, total sales of passenger vehicles declined 16.5% from 782 in July 2015. The number of commercial vehicles sold decreased on a year-to-date and year-on-year basis, down 17.5% and 20.3% respectively. The decrease in the number of commercial vehicles sold was mainly driven by a contraction in light and medium commercial vehicle sales. On a month-on-month basis, the number of commercial vehicles sold declined by 3.1% in July from 946 in the preceding month.

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Toyota and Volkswagen continue to dominate the passenger vehicle segment with Toyota selling 207 (31.7%) vehicles and Volkswagen selling 158 (24.2%) of the 653 passenger vehicles sold. Toyota was the market leader in light commercial vehicle sales with 46.8% of the sales in this segment, followed by Ford with 15.4% and Isuzu in third place with 12%. Commercial vehicle sales continue to come in higher than passenger vehicle sales as has been the long term trend.

The Bottom Line

Throughout the period of 2014 all the way to mid-2015, we have seen robust growth in vehicle sales, which was driven by a strong consumer base supported by expansionary fiscal and monetary policy and real wage growth in those periods. However, recent data indicates that this is no longer the case as vehicles sales contractions have been seen. Strong growth in vehicle sales over the last couple of years has significantly increased the base on which vehicle sales growth is calculated and this has contributed to the contractions seen in vehicle sales on a 12-month cumulative basis and year-to-date basis. That said the number of vehicles sold on an annual basis is still fairly strong.

The slowdown in the number of vehicles sold has been driven by a number of factors. For instance, higher interest rates and inflation levels, reduction in government spending (directly on vehicles and otherwise), and a weaker economic climate at large have adversely impacted the demand for vehicles. In addition, the amendment to the Credit Agreement Act made on 20 July, enforcing a mandatory 10% deposit on all passenger vehicles and reducing the maximum repayment period to 54 months will further drive down vehicle sales and growth thereof going forward.

Building Plans – July 2016

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sumA total of 121 building plans were approved in July to the value of N$175.4 million. On a year-to-date basis, the City of Windhoek has approved 964 building plans, a significant decrease when compared to the 1,552 plans approved over the same period last year. The dollar value of building plans approved on a year-to-date basis stood at N$1,133.6 in July, down 9.3% or some N$116.2 million over the comparable period last year. The slowdown in the number of building plans has been mainly driven by lack of land available in Windhoek.

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A total of 13 more building plans were approved in July than in June. The dollar value of the plans approved in July came in at N$175.4 million, up 12.6% when compared to last month’s figure.  14 more residential units and 98 additions were approved during July. The residential units and additions approved in July were worth N$32.61 million and N$115.72 million respectively. The number of commercial units approved in July amounted to 9, valued at N$27.04 million.

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The 12-month cumulative number of building plans approved continued trending down in July, as depicted by the graph below.  On a 12-month cumulative basis, 1,879 building plans were approved in July, 30.9% less than the same measure for July last year. In value terms however, 12-month cumulative value of plans approved in July was 1.9% higher than the value of plans approved over the same period last year, at N$2.08 billion. The 12-month cumulative number of building plans approved has fallen to a level last seen in November 1997, with most of this drop happening during the last 18 months. As a leading indicator for economic activity in the country this reinforces our view that we will see economic growth slow in 2016 and possibly beyond.

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The slowdown in the number of building plans approved has been largely driven by a lack of serviceable land in Windhoek as opposed to the popular belief that water restrictions in the Khomas region has been the causal factor. Furthermore, there have been no water restrictions imposed on construction activities around Windhoek. The Municipality has indicated that, there is a high demand for land, but little land left around Windhoek that can be developed.

The number of building plans approved is determined by the number of additions approved, and of new commercial and residential plans approved by the Municipality every month. Historically, the number of new additions approved has usually surpassed the cumulative number of new commercial and new residential plans approved. As can be seen below, the 12-month cumulative number of new building plans approved for flats and houses has been trending down for the most part since the turn of the millennium. This can be attributed to the undersupply of serviced land as well as the type of properties being built on the available land (multiple units on one erf may show up in the data as a single approved plan in many cases). Anecdotal evidence suggests that the lack of available land has contributed to a large extent to the number of additions applied for over the last 15 years as well as limiting the amount of new plans applied for. As property prices increase due to lack of supply so does the number of people living under one roof which may then lead to additional space added to existing buildings. Children stay with their parents for longer, and families accommodate members who cannot afford to rent, etc. The fact that we have seen a steady decline in additions on a cumulative basis over the last two or so years suggests that value addition to existing properties has become significantly less affordable and that the gains from such additions are now much less pronounced than before.

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Going forward, affordability issues are likely to mean that the lack of availability of land will become an even bigger issue than it is at present should sufficient steps not be taken to rectify the shortage. In the past the lack of available land has driven increases in property prices, but the limit of affordability is currently being tested, and thus property prices are unlikely to increase at the accelerated rate seen previously.