The Estate Agents’ Council (EAC) says lack of significant mortgage lending is curtailing recovery of the property sector and predicts an upsurge in the number of properties that will be auctioned if market situation persists.
EAC chairperson Oswald Nyakunika said the association is hoping revenue from diamonds will find its way into the mainstream economy in order to improve economic activity.
He said a number of properties have been used as collateral and defaults in payment have resulted in many properties being put on auction.
“The economy continues to be in a downward spiral. We hope money from diamonds will find its way into the economy and thus improve economic activity,” said Nyakunika.
“We continue to sell by deed of sale. Cash sales are few. As predicted, a number of properties are being auctioned. We expect plenty to be auctioned as we move to the end of this quarter and beginning of next year.”
He said major challenges facing the real estate are cash and liquidity crisis compounded by credit crunch.
“There is no significant mortgage lending and whatever has been made available has been a drop in the ocean.
The country has endured a protracted mortgage stress that set in at the turn of the decade when savings started dropping steeply, aggravating over the years and eventually slumping in 2008.
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BancABC Zimbabwe, in July, signed a $7 million line of credit from Shelter Afrique, a regional finance and development institution, to finance new mortgages.
CABS recently disbursed $2,8 million through mortgage funding for the development of houses in the high-density suburbs.
EAC expects property prices to remain stagnant in the current quarter to December unless there is significant activity in the economy.
On the performance of the commercial property sector, Nyakunika said Bulawayo industrial sector is “dying and commercial sector is struggling. Some $40 million has been set aside to assist struggling firms in the whole country. This we feel is a drop in the ocean. We also doubt if much of it will reach the intended targets”.
With a national housing backlog of more than one million units, Zimbabwe, like other Africa countries, requires significant investments in housing.