Building Plans – September 2017

A total of 181 building plans were approved in September, 9 more than was approved in August. In value terms approvals printed flat at N$116.88 million in September, not far from the N$116.20 million in August. A total of 86 completions to the value of N$39.03 million were registered in September. This is an increase of N$19 million in compared to N$20.1 million worth of completions in August. Year to date, N$1.83 billion worth of building plans have been approved, increasing by 17.4% year on year. On a twelve-month cumulative basis, 1,814 building plans have been approved worth approximately N$2.24 billion, 1.4% higher in value terms than the same measure for approvals in September 2016.

Of the total 181 plans approved in September, additions to properties accounted for 149 of those approvals. This category usually makes up the majority of approvals and continues to do so. Year to date, 1,157 additions to properties have been approved to the tune of N$829.4 million, 8.5% higher than in the corresponding period in 2016.

27 new residential units were approved in September. Year to date, 223 residential units have been approved, 32 units more than in the corresponding period in 2016. In value terms, N$349.6 million worth of new residential units have been approved year-to-date, a 6.20% contraction compared to the N$372.7 million in September 2016. On a monthly basis, new residential unit approvals increased by 22.7%.

Commercial and industrial building plans approved year to date amount to 32 units, worth N$652 million. This is a significant contraction from the 65 building plans approved by September 2016. This is however offset by the 54.2% increase in the value of these approvals compared to the corresponding period of 2016. 5 commercial and industrial building plans valued at N$10.20 million were approved in September. On a 12 month-cumulative basis, commercial and industrial property approvals rose by 16.6% in value terms in September despite the number of approvals contracting by 50.5%. This points to larger projects being undertaken compared to the base period in 2016, an indication of improving business confidence.

In the last 12 months 1,814 building plans have been approved, contracting by 2.5% compared to September 2016. The latest private sector credit extension data showed slowing growth in credit extended to corporates and individuals in August. Mortgage loans extended to individuals contracted by 0.9% m/m in August, but rose by 4.6% m/m for corporates. Commercial banks currently carry a healthy monthly average liquidity position of N$3.5 billion, providing sufficient levels of loanable funds. Consumers therefore seem curtailed by waning appetite for credit, or are simply not meeting affordability requirements.

However, a more positive outlook lies within the current slowdown in inflation and Bank of Namibia (BoN) leaning towards further relaxation of monetary policy in support of economic growth. Having cut interest rates by 25 bps in August, we expect BoN to keep rates unchanged at the upcoming MPC meeting in two weeks’ time as the South African Reserve Bank (SARB) left rates unchanged at its September meeting, citing long term inflation outlook as a risk to policy decisions. However, further rate cuts are expected at the last two respective MPC meetings scheduled for this year. This in turn will provide consumers with relative but very welcome relief that will flow through to discretionary incomes.

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