RESIDENTIAL developments dominated in the first half of the year ahead of commerce and industry as the property sector took a battering from the liquidity crisis and the credit crunch, the Estate Agency Council (EAC) has said. VICTORIA MTOMBA
“Developments are largely residential. There is very limited developments in commerce and industry largely due to inconsistencies of policy in this sector. There is need to clarify policies as regards property tax, property ownership and indigenisation,” EAC chairman Oswald Nyakunika said.
“Most sales are cash or deed of sale and where there is limited mortgage financing the repayment period [10 years] is short and monthly repayment and interest rates are very high. Interest is as high as 25%.”
Nyakunika said the majority of the residential developments were done by pension funds, insurance companies, financial institutions and individuals. Notable developers were Old Mutual, FBC, Zimre who have been working with city councils in the provision of serviced stands and housing developments schemes.
Old Mutual is currently building houses in Budiriro and disbursing them, FBC is constructing houses in Newlands, Glaudina and Masotsha Ndlovu while Zimre Property Investments has several housing developments projects in the country.
Nyakunika said the same institutions were providing mortgage finance although to a limited extent.
“The economy is such that properties are the only investment that has largely been used to secure loans. In the event of default and this is on rise, same properties have been put on auction. We have noticed an increase in the number of forced sale of properties. There is also a high default in rental payments and an increase in evictions, attachments and voids. Properties have also been attached and sold,” he said.
The challenges in the sector include lack of development capital, absence of mortgage financing, cash crisis in general and the fact that most sales were cash or deeds of sale. Property is used to secure capital and in this regard security of title is of paramount importance, he said.
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“We need to revisit some of our policy frameworks and provide policy consistency and security to capital in order to attract investment and come out of our current quagmire. We need policy consistency that gives an element of security to would be investors and stop capital flight,” Nyakunika said. Nyakunika said there was need to bring back faith in the banking sector and encourage savings and accumulation of capital.
