THE property market is stagnant as potential investors scramble to try and secure sufficient funding to purchase homes and offices, analysts said this week.
On the other hand, landlords continue to laugh all the way to the bank as rentals continue to skyrocket, making home ownership almost impossible in Zimbabwe.
Banks are giving individuals loans but these range from $50 million to $100 million, which is insufficient to purchase a core house in most high-density suburbs.
This week a five-bedroomed house in Greystone Park was being advertised for a cool $6 million in rent, while a four-bedroomed executive mansion in Borrowdale was asking for $5 million.
On the average, Zimbabweans earn less than $1,5 million.
“Properties above the $200 million mark are very difficult to sell right now,” said a spokesperson from Guest and Tanner Real Estate Agent (Pvt) Ltd. “People do not have money to buy houses and are instead trying to save for consumer items.”
Houses have continued to fetch very high prices especially those in the leafy suburban areas of Harare and Bulawayo.
Properties in the Milton Park area are going for between $300 million and $700 million while Avondale is asking for between $450 million and $1 billion.
In Bulawayo’s plush Khumalo suburb, four-bedroomed houses are also going for as much as $700 million.
A spokesperson from Ian H Ferreira (Pvt) Ltd told businessdigest that they had stopped participating in the property industry and were instead concentrating on other businesses.
“We closed down most of our property business,” he said. “We, however, do a little bit of this and that when asked to by clients.”
He said the property sector was static and individuals were finding it difficult to pay up on time.
Real Estate Institute of Zimbabwe (REIZ) president Abraham Sadomba in his report to members said Reserve Bank of Zimbabwe (RBZ) Gideon Gono’s monetary policy had ruffled the property sector.
He said high interest rates reduced activities in the property market by those who had access to cheap money and were buying property.
“They also reduced the amount buyers wanting to borrow from building societies could afford,” he said.
“Activities of asset management companies and banks who were previously very active in the property market buying property for speculative purposes have stopped.”
Sadomba, who on several occasions has clashed with the very vocal Affirmative Action Group (AAG) on rent increases, said the monetary system had brought about uncertainty within the property sector.
“There was a lot of uncertainty in the market with some sellers holding on to their properties in anticipation of higher prices,” he said. “Some potential purchasers stopped searching expecting prices of properties to come down as they were anticipating those who had purchased property for speculative reasons using cheap money to dump their property on the market in order to settle their debts.”
The property industry is now being used more for speculative purposes than for genuine accommodation needs.
Individuals are buying and selling houses at exorbitant amounts to try and make up for the low investment returns from the Zimbabwe Stock Exchange (ZSE).
Property market analysts said the sector would continue to be down because individuals were now very cautious about investment.
They also cited hyperinflation as a major hindrance to property market industry development.
“In general, at the beginning of the year 2004 buyers and sellers adopted a wait-and-see attitude,” Sadomba said. “As a result there was no meaningful activity in the market.”
He said members were very willing to cooperate with government especially on the issue of rent increases, a topic that has resulted in tension between the two.
Estate agents are seeking quarterly increases while government has recommended that rents be increased annually.