MORE properties are likely to be auctioned going forward as the rate of loan repayment defaults continue to rise sharply, the Estate Agents Council (EAC) has said.
VICTORIA MTOMBA BUSINESS REPORTER
In an interview with NewsDay, EAC chairperson Oswald Nyakunika said most properties being auctioned were held as security for monies borrowed.
“It is difficult to quantify how many properties are likely to be auctioned or have been auctioned suffice to say the number of non-performing loans ((NPLs) is on the increase and that means the number of secured properties likely to be auctioned is likely to increase,” he said.
“Certainly, we have seen an increase in the number of properties being auctioned especially in the last quarter.”
Nyakunika said the defaults were mainly in Harare as the city was the centre of business activity and dominated in many respects.
He said the country experienced serious cash crisis and businesses have not performed to expectation.
“Demand is poor and as such many companies have gone into administration and liquidation. Companies and individuals are struggling to pay back loans hence the increase in NPLs,” he said.
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Nyakunika said most properties being auctioned were being sold at reduced prices as they were forced sales.
“The level of uptake is depended on availability of cash. These are cash sales. The fact that there is a cash squeeze means most lenders have not realised what they wanted. As a result most of these properties have ended up back on the market for sale by private treaty,” he said.
Since the beginning of the year hundreds of houses and stands have been sold through auctions by financial institutions as they try to recover their money from lenders.
Many people including prominent people have lost properties due to defaults.
The failure to service loans by both individuals and corporate has dominated the property sector since the country introduced the multi-currency.
The multi-currency brought with it loans to the Zimbabwean market which had been starved of any credit due to the hyperinflationary environment during the 2008 era. Most of the credit that was offered had interest rates between 15%-25%.
