Buying Property a Pipe Dream for Many

OWNING a house in Zimbabwe continues to be a pipe dream for many. In a society where the once well-established middle-class has virtually become extinct, the ever-soaring price of houses has left more tenants than homeowners.

Middle to senior level management workers from large non-governmental organisations and well paying private sector companies will need to save their entire salary for about four years to pay a staggering initial deposit of US$80 000, which accounts for 20% of a modest house in Harare’s upmarket density suburbs.

Notwithstanding the pricing of property in foreign exchange, the scarcity of the units on the market will again make home owning increasingly unachievable.

Observation by businessdigest shows that residential stands have soared by over 200% in United States dollar terms within a year. A 2 000 square metres residential stand in The Grange, priced at US$30 000 last July, now costs up to US$70 000. A 1 000 square metre space in the medium-density suburb of Waterfalls costs US$10 000.

Analysts say this emerging trend follows the licensing of land developers to sell in foreign exchange.

The Reserve Bank issued Foreign Exchange Licensed Property Sellers and Lessors (FELIPROS) licences to a handful of real estate companies and land developers. Before this, properties were either pegged in the local currency or an equivalent foreign currency indexed against the suspended Old Mutual Implied Rate.

With civil service still constituting the bulk of formal employment, payment of the sector’s salaries in Zimbabwean dollars disqualifies them from becoming homeowners under the current topsy-turvy economy despite numerous unfulfilled government promises. This was not the case 15 years back.

Wilson Gutu (not real name), a primary school headmaster in Mount Pleasant became a homeowner in 2003 after fully paying a 25-year mortgage bond for his $28 000 (less than US$50 000 then) bungalow in the same neighbourhood.

“We pray that the gods may bless you, the so-called born frees,” Gutu said. “I applied for the mortgage in 1982 and paying the bond became easier towards the turn of the millennium when inflation came to the country’s doorsteps. This helped us to settle the mortgage loan before time. My family and I now have a house of our own.”

Private sector workers have not been spared from this position. Below par performance of industry has also meant that most companies no longer support housing schemes for their employees.

A culture of hand-to-mouth has become the norm in Zimbabwe, resulting in diminished real savings in the financial sector.

Despite all factors pointing towards a gloomy properties market, sprouting boulevards and mansions in Harare’s northern suburbs continue to bring a sunny side of life to the rich and sometimes not-so-famous.

Printed signs of “Work under progress” and sounds of earthmovers clearing indigenous trees and debris have become common features in these new residential areas. But who owns these properties?

Most people claim senior vice-president of the Construction Industry Federation of Zimbabwe, Phillip Chiyangwa, who recently partnered with a local building society in a US$500 million housing scheme paid in foreign exchange is behind the phenomenon.

“Anyone can own a property,” Chiyangwa argued. “Zimbabweans no longer rely on salaries. Civil servants for example have farms while others go to countries like China to get various products for commodity broking. This is the best time to invest on the property market.”

 Property prices, according to the Pinnacle Property Holdings boss, could further rise if an inclusive government is formed between President Robert Mugabe and leaders of the two MDC formations, Morgan Tsvangirai and Arthur Mutambara.

Under the Pinnacle and CBZ Building Society (formerly Beverley) deal, the latter offers between 80-100% bonds with the payment of a 20% deposit on the full price of the property. Due to the rate of depreciation of the Zimbabwe dollar payment of the deposit comes up in different forms — foreign currency and other valuable assets. This development comes at a time when many building societies have suspended their mortgage schemes.

“To alleviate this problem (affordability), we have come up with an innovative idea that is very reasonable,” reads the scheme’s pamphlet. “Since many Zimbabweans are in possession of various assets and commodities that have monetary value, we are offering to exchange these as deposit — head of cattle, agricultural commodities, farming chemicals, brand new furniture or other household goods…that has a fair exchange value.”

Asked why most urban dwellers were failing to access residential stands from local authorities, Chiyangwa said most of the land is in private hands. “City councils have sold their land because of poverty (inadequate funds). It’s now in the hands of private developers who sometimes sell the land among themselves,” he said.

Diaspora remittances, which have been credited in the past five years for the booming properties market, might not match the surge in property prices given that most Zimbabwean professionals based in Europe earn an average of $2 000 a month.

John Robertson, a Harare-based economist said many factors could have contributed to the recent surge in property prices. “Prices were relatively lower last year because some people were despondent and eager to leave the country,” Robertson said. “Right now a number a number of people are coming to the country in anticipation of a political solution—this could push demand for the houses. Payment of tax has also been higher due to pricing of properties in hard currency. This again could have also pushed prices upwards.”