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Property market inactive

Ngoni Chanakira

DESPITE receiving numerous enquiries about properties especially within the middle income bracket, the market is still quiet and prices are subdued, estate agents have said. <

They said the country’s property market was quiet with many houses available despite the fact that prices had fallen from their peak six months ago.

“There are more enquiries on our flats and houses, but there is a shortage of money and individuals cannot buy right now,” a spokesperson for Redfern and Mullet (Pvt) Ltd said. “Some landlords are withdrawing their properties from the market maybe because they feel the prices being offered are too low. Besides there is no money around.”

She said houses within the middle income bracket of between $250 million and $500 million were the ones being sought.

The property industry has seen prices falling ever since the Zimbabwe dollar began losing ground against the United States dollar.

Zimbabweans living abroad were selling their cash on the parallel market for as much as $8 000 to the United States greenback when the activity peaked.

However when the Reserve Bank of Zimbabwe (RBZ) introduced its auction system in January the parallel market tumbled, resulting in the US currency going for about $5 500 against the Zimbabwe dollar.

“This means that individuals now have to send more cash from overseas to buy the same properties that they could have bought earlier for much less,” an estate agent said.

The parallel market had witnessed thousands of Zimbabweans living abroad either snapping up all the properties on offer or building designer mansions around the country.

The cost of constructing a new house in the high density areas now escalates almost daily and building costs have shot up to the region of $7,5 million for a 26-square metre house.

Houses are now going for as much as $350 million in areas such as Eastlea while in the upmarket suburbs of Gunhill, Borrowdale, Highlands and Khumalo in Bulawayo they are fetching about $1 billion.

Houses and townhouses in the Avondale, Crowhill and West Gate areas have become the most popular because of their accessibility and proximity to shopping malls. Avondale and West Gate have huge shopping complexes.

A spokesman for Southgate and Bancroft (Pvt) Ltd said the market was quiet and prices were static.

“The demand is not very high,” he said. “In fact at the moment the market is quiet.”

He said flats were also in demand because individuals saw them as more affordable than houses.

“Flats are very much in demand but are currently not available,” he said.

The Reserve Bank of Zimbabwe (RBZ) introduced a new 30% productive sector facility which also benefited residential property developers and the construction industry.

In order to qualify for the scheme construction companies and building contractors have to be registered members of the Construction Industry Federation of Zimbabwe.

However, the RBZ warned industry players that they needed to improve on corporate governance and make use of formal channels when doing business to continue benefiting from the scheme.

Rentals have now skyrocketed and property market analysts say this is due to the country’s hyperinflationary environment.

Month-on-month inflation, which averaged 18% in 2003 and reached a peak of 33,6% in November 2003, retreated to 13,7% in January this year, 6% in February, before further decelerating to 5,9% in March.

Annually, inflation, which peaked at 622,8% in January this year, reduced to 602,5% in February and further decelerated to 583,7% in March.

The RBZ has warned estate agents and landlords against increasing rentals regularly, saying this was tantamount to profiteering.

A bachelor flat in Harare’s avenues was this week being advertised for $400 000 in monthly rent, while a two-bedroomed flat in the same area was seeking $1,3 million.

Across town in the plush Belgravia area a garden flat said to be suitable for diplomats and non-governmental organisations was asking for offers above $3 million.

On the sales side a flat in the Borrowdale Brooke Village was going for $350 million, while others in the avenues area were advertised for between $90 million and $130 million.

“There is no cash around at the moment,” the Redfern spokesperson said. “When people do buy properties they are paying in installments. Money is very tight right now.”

Analysts said those with foreign funds were however continuing to snap up mansions because it had become cheaper to buy than build a house.

“The various shortages of cement, bricks, and woodwork give prospective home owners a nightmare right now and they therefore prefer buying than building,” the estate agent said.

“However, landlords have stopped selling their properties waiting for prices to increase.”

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