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.
