RESIDENTIAL property prices increased by an average of 25% during the first quarter of the year as sellers raised their asking prices in line with th
e galloping inflation rate, a property analyst has said.
This was one of the highest increases inside three months over the past nine years, bringing the average price of a house in the medium density areas to $10 billion by March 31.
The highest such previous increase was said to have been witnessed during the last quarter of 1997, when the dollar fell against major currencies on November 14, the analyst said.
“The average increase for residential property prices was about 25% in the first quarter. A significant movement was witnessed in the medium density areas,” said Stanely Kufa, a property analyst.
He said some houses in the up-market surburbs such as Borrowdale Brooke and Helensvile were not normally included in the calculations because their designs were unique to the extent that they would distort the market pricing structure.
Some houses in such areas were selling at above $80 billon.
The average price for houses in low-density areas is $6 billion, while that of low-density areas is $30 billion.
“On a month-on-month basis, nominal growth in house prices was up about 7% in March. Real month-on-month growth of 9% was recorded in February,” Kufa said.
Based on the current average mortgage interest rate of 68% and the average price of a house in the medium density in March, the monthly mortgage repayment and the gross monthly income required to afford a 100% residential mortgage, increased by almost 50%.
“Rentals are now being reviewed quarterly. Depending on when one’s quarter ends, many tenants had their rents reviewed by between 60% and 80%,” Kufa said.
The property market is expected to experience increased activity during the second quarter of the year, spurred by investors seeking to hedge against rising inflation.
Inflation surged to 913,6% for the month of March, up 131,6 percentage points on the February figure of 782%.
Ideal Properties director, Gary Shelton, told businessdigest this week that the recent inflation figure would inevitably push property prices up and might force owners to hold on to their assets as a cover against inflation.
“Properties have become the safest form of investment as a hedge against inflation in Zimbabwe. As such property prices will continue to be pegged in line with the prevailing inflation rate,” said Shelton.
“The figure could increase in the second quarter as the recent increases would soon translate into property prices,” he said.
Over the past year property prices have increased almost four times. The increases witnessed were not due to an increase in demand over supply in the market but due to sellers increasing the selling prices in line with inflation to ensure that they are not losing in real terms.
Since the beginning of the year, property owners have ensured that they maintain the value of their properties in line with inflation.