November 01, 2024
Property

Windhoek land prices driving up construction costs

By February 11, 2022
Windhoek land prices driving up construction costs

The high cost of land in Windhoek is pushing up construction costs of houses in the capital, a recent report by First Capital (FC) has revealed.

According to the FC Building Cost report, construction of a standard three-bedroom house costs on average N$616,886 in Windhoek, while in Keetmanshoop it could cost N$408,640 due to varying land prices.

“Taking into consideration all costs involved in the house construction value chain, land accounts for 5% of total cost in Keetmanshoop while in Windhoek it accounts for 38%. Land measuring 375 square meters in Windhoek’s Khomasdal suburb (considered a middle-income suburb) costs 11 times more than the price of land in Keetmanshoop’s middle income suburb,” read part of the report.

This comes as building cost inflation accelerated to 7.1% in December 2021, a 5-year high price increase on building materials.

“Broad-based elevated price pressures on building materials persisted for the entire second half of 2021 with a notable exception of cement price that is aligned to local demand fundamentals. Notable high inflationary pressures are observed on predominantly imported materials (Mostly electrical goods), a trend which this research attributes to be largely due to supply disruptions compounded with global rising production costs. However, for sand prices, the price pressure is pinned down on the ongoing environmental compliance enforcements which drives suppliers far from their delivery points meaning higher transportation or delivery costs to clients. Recent trend of rising fuel prices adds another layer on sand price inflation,” the quarterly report said.

Building materials costs, according to the report, account on average for more than 60% of the total cost of building a new residential house.

“Cement prices remained subdued posting a mild growth of 1.2% in December 2021(Y/Y). After nearly half a decade long freefall trend of cement prices, the year-to-date data suggests the setting in of a somewhat lacklustre positive price growth which could persist for the foreseeable future provided demand push factors of cement remain weak.”

Price of super bricks increased by 4.7% in December 2021 compared to December 2020, the report noted.

“The price changes of bricks largely reflect the average trend of sand and cement prices the key input components for producing bricks. Among the material inputs for super bricks, sand prices went up by 8.2% , while cement prices remained steady with a marginal growth of 1.2%.”

In December 2021, the First Capital report noted that the prices of electrical goods were 8.9% higher compared to December 2020.

“These materials are predominantly imported, and their domestic prices get the cue from a combination of both domestic and international factors. Global production costs continue to edge up mainly due to a combination of firming commodity and raw materials prices and rising labour costs. Sharp price increases were further observed on plumbing and tilling materials that are equally import dominated.”

The First Capital House Building Cost report monitors cost trends of building a standard 3 bedroomed residential structure measuring 76 square metres.

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Last modified on Monday, 14 February 2022 17:18
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