WITH residential stands now going for as much as $1 billion in upmarket suburbs and $50 million in high density suburbs, the majority of Zimbabweans living locally can only dream about owning
Twenty years ago houses in upmarket suburbs such as Highlands, Borrowdale, Helensvale and Chisipite were going for between $20 000 and $50 000. In high density areas such as Highfield and Mufakose they were going for between $5 000 and $10 000.
Prices for the same houses shot up 10 years later to between $500 000 and $1 million in the low density suburbs and $50 000 and $200 000 in the high density areas.
Today however they are fetching between $800 million and $4 billion in low density areas and as much as $80 million in high density suburbs as hyperinflation takes its toll on Zimbabweans.
With the eroded salaries dished out to most Zimbabweans only a miracle will enable one to own property.
It is a different story for landlords however who are laughing all the way to the banks as they keep hiking rentals almost on a quarterly basis.
Due to hyperinflation, landlords with properties at the top end of the market were increasingly quoting rents in hard currency.
In late 2003 a typical rent for a four bedroom, two bathroom house with swimming pool and good security provision in the northern suburbs of Harare was in the region of $1 million and $2 million a month (US$222 to US$444), according to international property consultants Knight Frank.
Property has become big business for those who managed to snap up stands and houses when prices were still “affordable”.
Summarising events of the past year the Real Estate Industry of Zimbabwe (REIZ) says in general the high demand for properties from companies and individuals in the past forced prices up and in the process valuation fees which are normally based on the open market values obtained.
The association says in the case of valuation for insurance purposes the valuation fees also increased in sympathy with the relative increases in building costs.
REIZ president Abraham Sadomba said those in the agency business such as residential, commercial and industrial, benefited from the increased business activity in the property market.
“Demand for property was coming from companies and individuals who had access to cheap money especially those in the financial services sector and individuals who were buying properties on a speculative basis and our nationals working in the diaspora who were taking advantage of the weak Zimbabwe dollar on the parallel market and buying residential properties,” Sadomba said. “There are reports of asset management firms buying five to 10 units in cluster home schemes on a speculative basis.”
He said in the property management field rents were increasing due to demand and landlords wanting to ensure that their incomes were keeping pace with inflation.
“Operating expenses accounts for buildings managed were also increasing in line with inflation,” Sadomba said. “Property manager commissions which are based on a percentage of income collected on net rents and operating expenses accounts increased substantially.”
Two weeks ago Reserve Bank of Zimbabwe governor Gideon Gono took his Homelink crusade to the United States, the United Kingdom and South Africa where he tried to woo locals abroad to continue investing in the country’s property industry.
Locals abroad have been sending money, which was later resold, on the parallel market, to snap up properties in upmarket suburbs countrywide.
The move caused locals here to struggle to buy basic homes because the prices had escalated due to the strength of the South African rand, US dollar and UK pound being sent by those in the diaspora.
Gono told Zimbabweans gathered in Birmingham on June 12 that a key inspiration of virtually every forward-looking Zimbabwean was to be able to own a decent and comfortable home.
“This notwithstanding, often, many young Zimbabweans have been finding it highly challenging to meet this basic essential, given the typical huge financial outlays required for direct purchase or construction of meaningful housing structures,” he said. “To address this constraint, focused initiatives by some enterprising fellow Zimbabweans are already underway, where schemes for home ownership are being structured for Zimbabweans in the diaspora. Through close consultations, under the auspices of the RBZ advisory board, these initiatives are receiving full support from the central bank.”
He said the RBZ’s intentions with fellow Zimbabweans in the diaspora had already clearly shown that more still needed to be done to widen and enrich the operational modalities and coverage of the current housing schemes.
Most building societies and banks are faced with reduced demand from clients because the amounts they are offering is just not enough to construct a basic three bedroom home.
Gono said there was need to enhance affordability through tailor-made financing packages that are flexible on the tenure of mortgage loans, and the periodic installments.
He said injection of larger resources into the schemes, to ensure wider access by fellow Zimbabweans, most of who had patiently queued in waiting lists for long periods of time.
“There are already some formalised structures offered by Global Access Network who are providing a full package of housing schemes – from land purchase to completion of construction of housing units,” he said. “Global Access are in strategic alliance with other providers of goods and services of value to investment in real estate. Plans are underway to expand the scope of these alliances to also cover the provision of services in insurance and investment into the money and capital markets.”
Sadomba said during the later part of 2003 the high interest rates had reduced activity in the property market by those who had access to cheap money and were buying property including those in the diaspora.