admin
Kudzanai Sharara
Trading in the property market is currently paralysed as sellers are still to adjust to new regulations that require all local transactions to be conducted in the local Zimbabwe dollar.
This was done through SI 142 of 2019 which reads: “The British pound, United States dollar, South African rand, Botswana pula and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe.”
The local currency has, however, been weakening since it was floated back in February when the Reserve Bank of Zimbabwe abandoned the long held parity between the local currency and the US dollar.
Through the 2019 Monetary Policy Statement, the RBZ introduced an interbank foreign exchange market in Zimbabwe to formalise the trading of RTGS balances and bond notes with US dollars and other currencies on a willing-buyer willing-seller basis through banks and bureaux de change.
Since then the local currency has lost 89 percent of its value, making it risky for property sellers to accept it as a form of payment.
Further, the value of money has also been ravaged by inflation with the June inflation rate coming out at 176 percent, putting further uncertainties to sellers of property who now seek to preserve value through holding on to their properties or putting a risk premium on property prices.
Zimre Property Investments (ZPI) managing director Edison Muvingi, said sellers had been accustomed to the US dollar and are still to adjust to local pricing.
“If they are going to accept a Zimbabwean dollar payment, it must have a rate that is way beyond whatever we know,” said Muvingi.
A quick survey done by Business Weekly, showed that properties are ranging between $300 000 for houses in high density areas, while three-bedroomed and four-bedroomed houses in medium to low density suburbs are upwards of $800 000.
These prices analysts say are beyond what the ordinary worker can afford. Mortgages that are currently offered by financial institutions, which are calculated using one’s wages and salaries, are also insignificant when compared to prevailing prices on the market.
“I think at the moment, the confusion makes it very difficult for anyone to transact,” Muvingi said.
There is a wait and see attitude, he said.
Muvingi said the property market is currently “paralysed” as everyone is seeking to hedge against value loss, which the local currency brings into the equation.
“I dont believe there is any significant deals that are taking place at the moment. Everyone is waiting to protect their value,” he said.
Muvingi said ZPI had managed to complete its projects, the Sawanga Shopping Mall in Victoria Falls and conversion of the Nicoz House building to student accommodation in Bulawayo, before the “mayhem started”.
He said if the mayhem had started before in the middle of construction some of “these sights would have been closed”.
Regular rental reviews
On rentals, Muvingi said before the re-introduction of the Zimbabwe dollar, rentals were linked to the interbank rate, while some rentals were in US dollars.
But because of the volatility of the rate, it was now difficult to determine rentals in local currency.
“We have now agreed on reviewing the rentals every two months. We can give you a 10 months’ lease, but the rentals will have to be reviewed regularly,” he said.
Realtor Simba James, shared the same sentiment saying: “The market is heavily distorted for now and definitely out of reach for working class.”
Bongani Ndlovu