Zimbabwe currency reforms sedate property market

PLAYERS in the real estate sector are saying the currency reforms introduced in the country over the last few years have dampened activities on the property market.

A Bulawayo-based registered estate agent Mr Desire Dube told Sunday News Business last Friday that the inflationary pressures and a plethora of regulations in the country’s financial sector over the past three years has had a negative impact on the property market.

“The issue of currency instability has affected the selling and buying of properties because many people are not sure on the prices to set for their properties and some fear that the prices they set for their properties can be hit by inflation, which may result in them losing out on their investments,” he said.

In November 2016, the Government introduced bond notes backed by the US$200 million African Export-Import Bank loan as part of its efforts to ease crippling cash shortage in the country. 

Despite the notes being initially pegged to the United States dollar, their value collapsed, with everyday transactions spiralled by activities on the black market.

In June last year, the Government put an end to the multiple-currency regime and made the Zimbabwean dollar the sole legal tender through Statutory Instrument (SI) 142 of 2019.

Before the introduction of the instrument some players in the property market were already trading in United States dollars.

Mr Dube said the real estate sector last recorded growth in 2012 and has been on a slump thereafter.

“The real estate sector last enjoyed a rise in performance in 2012 where it rose from 53 percent in 2010 to reach a peak of 56,7 percent in 2012 and this was due to the economic stability that was prevailing during that period and this shows that the economy and the sector go hand in hand. 

“The performance of the real estate sector is dependent on the performance of the economy in the sense that this is a capital industry. 

“When people buy properties, they are investing and accumulating wealth thus all this can be accomplished if the country’s economy is sound and given the present situation in our country the prevailing state is not conducive for the real estate sector,” he said.

Ever since the three-tier pricing system organically developed, properties have become expensive as prices of properties are increasing by the day. 

Residential stands are now sold at different prices depending on the kind of payment method one will be using, if one uses US dollar or bond then the payment will be less compared to one using plastic money and mobile money.

The three-tier pricing system is whereby one is charged different prices for the same commodity. 

Homemakers Property Rentals and Sales chairperson Mr Nazzy Chiggs Moyo said most real estate agencies are now pegging prices of properties in foreign currency preferring to deal mostly with the Diaspora community. 

“A lot of property seekers have come from across borders compared to locals with the challenge being the issue of eroded incomes. 

“We used to have mortgage sales at the banks as well as bank loans but because of the prevailing inflationary environment these aren’t being offered or have no takers and this has left only those in the Diaspora having the buying power,” he said.