Source: US$ speculation drives property prices up – DailyNews Live
Eric Chiriga 7 May 2018
HARARE – United States (US) dollar exchange rate speculation has
significantly driven up property prices in Zimbabwe’s capital, Harare, as
buyers move to hedge against the volatile bond notes, a latest Knight
Frank Zimbabwe (KFZ) report has revealed.
This comes as bond notes – a unique currency introduced by the Reserve
Bank of Zimbabwe in November 2016, valued at par with the greenback, to
solve a deepening cash crisis – have lost value against the US dollar on
the parallel market to trade at around US$1 as to $1,20.
According to realtor KFZ’s 2017 Annual Property Report released last week,
“in Harare demand for residential properties to purchase increased in the
last quarter of 2017 with demand exceeding supply”.
“This was because many people were trying to convert the RTGS values into
tangible assets. However, most sellers are demanding payment in United
States dollars.
In situations where bank transfers are being accepted, purchasers are
having to pay a premium,” KFZ said, adding “as a result of the increased
demand, prices for high value houses increased by about 15-20 percent,
between 2016 and 2017”.
It said “the residential property market is now a seller’s market”.
KFZ said the mortgage market has also been negatively affected, with
interest rates rising beyond home-seekers’ affordability.
“Mortgage finance is at interest rates of between 15 percent and 17
percent per annum. The rates are considered very high and the majority of
home seekers’ incomes cannot support the resultant repayments.”
On the other hand, KFZ said the tough economic environment has not only
affected property buyers, but also those seeking to rent.
“Due to high unemployment, low disposable incomes…the demand for
residential accommodation to rent decreased while the supply has
increased,” the realtor said, further stating “residential rental values
have continued to decline and voids are high”.
“In Harare, rental values for 3-4 bedroom houses have remained the same at
$1 500 to $2 000 per month between 2016 and 2017.”
It said securing quality tenants takes up to four months for flats and up
to six months for a prime house.
Crucially, KFZ said “rent defaults have worsened and in most cases many
tenants abscond after accumulating rental and utility cost arrears”.
“Landlords are finding themselves having to inherit these debts,” it said.
In Bulawayo, KFZ said, prime rents for high value houses are in the range
of $600 to $ 700 per month. Rentals for one-bedroom, two-bedroom and
three- bedroom flats are $ 250, $ 300 and $ 350, respectively.”
“Overall, there are limited speculative housing schemes taking place
because the high construction costs put the completed units out of reach
for the majority of potential buyers,” KFZ said in the report.
In Bulawayo, prices for high value houses are in the region of $200 000 to
$250 000.
One-bedroom, two-bedroom and three-bedroom flats are fetching US$20 000,
US$30 000 and US$40 000, respectively.
On industrial properties, KFZ said: “Zimbabwe’s industrial sector
continues to decline with some manufacturing companies either shutting
operations or scaling down.
Lack of credit, high interest rates, competition from cheap imports and
obsolete production equipment have negatively affected Zimbabwe’s
manufacturing sector.”
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