HomeBusiness DigestMortgages too high

Mortgages too high

Eric Chiriga

MORTGAGE lending rates are not yet low enough to stimulate investment in the property market, property analysts say.

vetica, sans-serif”>Potential investors say returns in the industry are still too low and not guaranteed.

“The rates are still too prohibitive to stimulate investment in the property industry,” Boysen Mutembwa, a director at Bard Real Estate, said.

Mutembwa said there would be limited residential, industrial and commercial property development until the rates were affordable.

“The ideal mortgage rates should be between 10% and 15%, anything above that is not acceptable because it adversely affects borrowing capacity,” he said.

Beverly Building Society currently levies mortgage lending rates of 80% for residential and 130% for commercial development.

Central African Building Society (Cabs) also charges 80% for residential and 110% for other projects while the Zimbabwe Building Society (ZBS) is charging 100% for residential and 160% for short-term loans.

Mutembwa said there were many potential investors who were waiting for the right environment.

“Investors are not willing to invest in the property industry because the environment is not conducive,” Abraham Sadomba, the managing director of CB Richard Ellis, said.

Sadomba said besides the low return on investment, investors were also not willing to invest because of interference by the Rent Board.

“An investor buys a block of flats and is told the amount of rent to charge, which is not enough to cover the costs incurred in buying and maintaining the piece of property,” Sadomba said.

“The Rent Board should be removed and rentals determined by the forces of demand and supply.”

The Rent Board determines rentals of leased property and these can only be increased with the approval of the board first.

The board falls under the Ministry of Local Government, Public Works and National Housing headed by Ignatious Chombo.

But investors say the rents do not encourage new investment.

“The decrease in the mortgage lending rates will result in more people being able to borrow,” Sadomba said.

Mutembwa added that there was a shortage of houses as people were clinging on to their houses.

“People owning good quality houses are not willing to sell as they expect prices to go up. This pushes up the prices of houses,” he said.

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