The upper end of the housing market in Papua New Guinea is being adversely affected by the closure of the international borders, according to Tom Snelling, General Manager of property classifieds site Hausples.com. But he expects that there will be more movement in the cheaper areas of the real estate market.

Harbour City and Konedobu in Port Moresby. Credit: BAI

With much of Papua New Guinea’s high-end real estate occupied by expat workers, many of whom have returned home amid the COVID-19 crisis, the top end of the real estate market is feeling the pinch of the pandemic.

Haus Ples’ Tom Snelling says PNG’s housing is ‘broken into different areas’, with the more expensive properties normally taken up by corporate clients. He says the closure of the borders is likely to have a negative impact.

‘It is difficult to say how many people were repatriated before the State of Emergency started,’ he tells Business Advantage PNG. ‘But sales seem to be quite limited. I anticipate that the values in that area are going to drop fairly significantly, although it hasn’t happened yet.’

Snelling anticipates ‘probably depressed prices’ in this segment of the market for the rest of the year.

‘We normally get about 14 per cent of our traffic from Australia, although we’re still getting about 11 per cent despite the closed borders.’

‘What we are seeing in the market, though, is that affordable housing is coming on line over the next year or two.’

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The economic situation, he says, is ‘mixed’ in the country. ‘I think we have the same situation as rest of the world. Some people are in a position to wait it out. Other people, who don’t have that luxury, have to trade to put food on the table.’

Affordable housing

Hausples.com’s Tom Snelling. Credit: Hausples

Snelling expects that in the middle section of the real estate market there will be less price movement, however.

‘I think prices are going to stay fairly static. As long as people are looking in the less-than-K400,000 parameter, they will be able find something,’ he says. ‘What we are seeing in the market, though, is that affordable housing is coming on line over the next year or two. We have got large developments within Kennedy Estate at Seven Mile, which is getting inquiries every month. Within that particular estate, there should be more developers selling.’

Snelling says that superannuation funds are getting more involved in housing development. ‘It will give a few more options available to people, give them more choice.’

The Bank of PNG has sought to lower interest rates in response to the COVID-19 crisis. ‘I believe the banks are doing what they can. I think there is a certain amount of flexibility they are offering.

‘A lot of people have not necessarily been laid off, but have had hours reduced,’ Snelling adds. ‘So there is less cash available to be paying mortgages.’

Still marketing houses

Port Moresby’s China Town construction site. Credit: BAI

Snelling says Hausples has been affected by the COVID-19 emergency but is not ‘in a position of crisis’. He is optimistic about a rebound.

‘Marketing is always going to be a major part of [restimulating business] and the property market is the same as everywhere else. If you are building houses, if you are renting houses, you have to market,’ he says. ‘In this environment, where some people are cutting staff, they will question their marketing spend. But at some point they will say: “We have to risk it to get customers; we have to get more sales and invest in marketing.”’

Snelling adds that some of the property developments run by Chinese developers have been put on hold due to closed borders. But he believes it will only be temporary.

‘Once they get back to normal, I would imagine these projects will go ahead as planned. Because there is a demand for these sorts of developments.’