Lack of mortgage affecting property sales

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THE high level of non-performing loans which rose to 15% last year from 5% in 2009 has seen many Zimbabweans losing properties.

NewsDay business reporter Victoria Mtomba (ND) spoke to Estate Agents Council chairperson Oswald Nyakunika (ON) on issues affecting the property sector following the introduction of the multiple currencies.

ND: What are the reasons for defaults in payments of mortgage loans?
ON: I think the banks and the building societies are best placed to advise you as regards defaults in mortgage payments. However, it is fair to say there is serious cash/liquidity crisis that is affecting viability of most businesses and therefore, disposable income.

ND: How do you rate the performance of residential and industrial properties in 2013? Can you say it was better or worse than the previous years?
ON: Property sales have been affected by lack of mortgage finance and the current cash/liquidity crisis. Where mortgage finance is available the interest rates have been very prohibitive. The liquidity squeeze is having a serious impact on businesses with many going under administration or in liquidation. This is affecting their ability to meet current obligations to include payment of rentals. There is increase in voids and serious impact on property values everywhere. The situation is unlikely to improve in 2014.

ND: What were the major challenges for the sector as a whole in 2013?
ON: Our economy is faced with serious crisis of confidence. Like most third world economies we rely heavily on agriculture and mining. There is, therefore, need to promote foreign and local investment in these sectors. Whatever manufacturing we had is dying due to foreign competition and aged machinery. We have become a nation of shopkeepers selling foreign products. Unfortunately that is putting a further drain on our limited resources. The poor state of the economy is affecting investment in all sectors of the economy to include property.

ND: What is the future outlook for the sector in 2014?
ON: Things are unlikely to get better in the short or medium term. Shifts in policy are sometimes slow and implementation on the ground even slower.

ND: Do you think banks will be able to release more funds for the sector this year?
ON: Banks themselves are in trouble. There are huge debts in their balance sheets either as a result of poor lending policies or deteriorating economic situation. Most are surviving on bank charges rather than interest from lending. In these difficult economic times their lending policies will get tighter.

ND: Did applications for the sell of residential and commercial stands increase in 2013 and what do you attribute that to?
ON: There is an increase in sales by Deed of sale or installments. Some workers are getting loans from their employers. But all in all sales have been affected by credit crunch or lack of mortgages.

ND: Are the prices for stands and properties increasing?
ON: Most stands are allocated at reasonable prices by city council or government and title can only be granted when minimum development requirements are met. A few are sold as freehold. In this regard most individuals who can’t buy developed properties opt to build over a period of time. It is probably the most affordable way for most people. Most people, however, have fallen victim to gullible property developers. They have lost their monies or have had the same stand sold to other  people or failed to get title.  Verifying that title is good before you buy and better still use registered agents.  Register or deposit monies with lawyers to guarantee transfer of title.

ND: Is it a true assertion to say the country is experiencing an increase in property development?
ON: Property development has generally slowed down. We have seen a fall in marginal increases over the years.

ND: What is the level of capacity utilisation of the sector so far in Harare, Bulawayo and other areas?
ON: Industrial capacity utilisation is as low as 10%.  There is serious underutilisation in all sectors of the economy. The economy is shrinking.