Govt targets home loans, but economists say house prices are the problem

Economist Omu Kakujaha-Matundu says the government should focus on reducing house prices rather than blaming banks for long mortgage repayment periods.

His comments follow concerns raised by prime minister Elijah Ngurare about the lengthy repayment period of home loans in Namibia.

Mortgage repayment periods typically range from 20 to 30 years.

Kakujaha-Matundu says long repayment periods are often the result of high house prices rather than banking regulations.

He says many first-time home buyers cannot afford monthly repayments on expensive houses if loans are structured over shorter periods.

“If a house costs N$2 million, an ordinary person cannot afford the monthly installments over a short period. The longer repayment period makes the house affordable, even though it increases the total amount paid over time,” he says.

Kakujaha-Matundu says borrowers are not forced to keep a mortgage for the full loan term and can settle their loans earlier if they have the means.

“There is nothing that prevents you from paying off a house in five years or even less than 10 years.

“The government should look at how it can bring down the cost of serviced land so that house prices can come down,” he says.

He also suggests reviewing transfer costs and other property-related charges that increase the overall cost of buying a house.

The debate over housing affordability comes as more Namibians struggle to enter the property market.

Two weeks ago, The Namibian reported that 70% of Namibians are too poor to buy a house.

At that time, Bank of Namibia deputy director of policy research Abigail Thieme said fewer than 10% of the working population owe banks N$45.1 billion in home loans.

Public policy analyst Lazarus Kwedhi shares Kakujaha-Matundu’s sentiments.

He says banks do not offer 20-year mortgages to punish borrowers, but because longer terms reduce monthly repayments and make housing accessible to more people.

“Eliminate the 20-year loan and you do not force banks to be more humane. You eliminate home ownership for everyone except the wealthy,” he says.

Kwedhi adds that the government has relied too heavily on banks and private developers to address the housing shortage.

“The housing crisis will not be solved by shouting at the market. It will be solved by the government doing its job,” Kwedhi argues.

This week the Bankers Association of Namibia (BAN) said shorter home loan repayment periods could make homeownership less affordable for many Namibians, despite reducing the amount of interest paid over time.

According to the association, the length of a mortgage is designed to balance affordability and access.

The association said the main issue is affordability rather than the type of asset being financed.

It also notes that vehicle loans and home loans are structured differently. Vehicles lose value over time, while property can retain or increase in value and often helps households build wealth.

BAN said improving access to homeownership requires more than changing repayment periods.

“This is an important national conversation. By improving financial literacy and strengthening collaboration between the government, regulators and the private sector, we can expand access to housing and enable more Namibians to achieve home ownership,” BAN chief executive Dantagos Jimmy said.

In 2024, finance minister Iipumbu Shiimi tabled proposed amendments to the Income Tax Act of 1981 in the National Assembly to reduce the tax burden on new homeowners.

The proposals included increasing the tax threshold on property transactions from N$50 000 to N$100 000. Under the proposal, homeowners would only pay tax on amounts exceeding N$100 000.

The National Assembly never passed the proposed legislation.

At the time, the government estimated that the measures would provide about N$646 million in tax relief, averaging around N$12 000 per taxpayer each year.

Gobabis teacher Taljaard Uaputauka tells The Namibian that many homebuyers have little control over how funds are used when purchasing houses through such arrangements.

Uaputauka says homeowners are left repaying loans for many years despite having little say over the construction process.

Uaputauka questions whether banks are doing enough to monitor projects through inspections and quality control measures.

He says many civil servants view housing finance as an employment benefit but often face challenges when problems arise during construction or after care services.

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