There is a Latin saying, Carpe Diem, that means Seize the Day. It can also be translated that you should enjoy the moment. Having been a bachelor for more than a decade, I had never really taken this advice to literally in terms of material possessions. Now that I am married and planning for a family (again), I have had to re-evaluate my future plans and need to start seizing the day. This is important especially in light of me wanting to have a house with a big yard in anticipation of my soon to be born child.
Having been married before, and owning at least three properties during those ten years, I eagerly started the process of looking for a suitable house that I would also be able to afford. And then reality struck. I live in the City of Windhoek which as the second highest increase in house prices in the world. Yes, that’s the second highest INCREASE in property prices in the World.
At first it did not strike me that hard when I heard the prices of erven sold by the Municipality went over a million dollars. After all, the area in which these erven were auctioned in a very luxurious area and has access to most of the important services such as schools, university, gold course, access to the western bypass, etc. Thus I heard about the prices and just shrugged my shoulders.
Last week, I happened to go past a property I had owned near the Polytechnic of Namibia and I saw a person standing in the driveway. Out of curiosity, I approached the person and found he was the “new owner” having just bought the house some three months before. I politely enquired about the price and that’s when the reality of our house price increases hit me. The owner proudly informed me that he had purchased the house at a bargain compared to other houses in the area – a bargain meaning he paid only N$ 1,240,000. He considered over 1,2 million a bargain?
Having been a previous owner of the house, I sat down that night and contemplated what this price increase means for me compared to what it meant for me in 1997 when I had originally purchased the property. In 1997, I was a Managing Director of a multinational company and bought the house for a purchase price of N$ 260,000. At that time my salary was around N4 18,000 a month and I could comfortably afford the monthly payments. Comparing the price increase in the property I tried to calculate what my monthly salary would have to be for me to comfortably afford the house now.
Can you guess how much I would have to earn now in 2014 to afford the property? I figured I would need to earn a salary of just over N$ 83,000 to be able to live in a similar fashion to what I did in 1997. I am sure that you must realise by now my salary has in no way increased by the same amount that the house price did.
I will have to now look for a property more within my budget – and I am not sure I will even find such a property now. But of course, I must cease the day otherwise the house will just become more elusive in the future.
I now took another look at the erven that were auctioned by the City of Windhoek. The prices were originally listed as “upset” prices – meaning that was the minimum that the CoW wanted to get as a return of their investing in the sewerage, roads, and other services. In other words, the CoW wanted to make at least the same amount of money that they had spent on putting the services in with at least a little bit of profit.
Surprise, surprise. The CoW made more than triple the expected price (in other words for every N$ 400,00 they spent, they made a profit over and above the costs of around N$ 800,00). The CoW has responded to the citizens inquiries by saying it is not their fault as the auction caused the prices to reach these levels. No. The prices were driven up by a basic economic principle of supply versus demand. There are very few erven available compared to the number of people that want to purchase the erven, meaning that the supplier of erven can cause the the prices to be pushed up by NOT supplying enough erven to meet demand.
Thus, the CoW as the supplier of erven (or non-supplier if you ask me) has caused the prices to steeply increase because they control the supply side of the equation. In any country, this would be a case of anti-competitive behaviour and the authorities would react to prevent this situation and its negative impact on the consumer. I hope that this will be looked into by the relevant authorities and they do something about the situation before none of us can afford a house in this city.
My compliments to the CoW though, they have seen an opportunity to increase their revenue and they have certainly Seized the Day.