My birthday passed recently and I was contemplating on how when my father was my age: he owned a house. My parents had spent about 17 years paying for it. I recall the day my mum showed me the title deeds to the house proud that they had paid off the mortgage in full. A decade later, I remember laughing with my mum when she finished paying off a loan for a set of Kensington lounge sofas, and ironically how they cost the same amount as what they had paid for the house in the early 90s.
I live in a world where one can barely qualify for loan to buy furniture, let alone buy a house. The only assets I own; a phone. a laptop and a blog.
Things weren’t like so, the economy was once stable, with inflation fairly minimal and one could commit to being locked into a contractual agreement for the next decade or even two.
Then Zimbabwe experienced a hyperinflation meltdown, people’s savings took a tumble, money lost value overnight and now no one is keen to be tied down with long term payment plans since you never know….
Real estate is a thriving business, how can it not be? It is a solid asset that maintains value as the economy twists and turns and can even offer lucrative returns as property prices have been going up and rarely go down. Small wonder the price of premium properties in Zimbabwe tends to cost more compared to the global price markets. An article in The Standard compared property prices in Zimbabwe vs those in South Africa and showed how the prices in Zimbabwe for low-density housing, rivalled premium real estate, beachfront properties in South africa’s coastal cities.
The Zimbabwean economy is largely informal with a high percentage of the population being self-employed in the informal sector and not likely to have requirements to secure a home loan while those who are formally employed would have to be high earners to afford the high rate of mortgages.
There’s also a new breed of entrepreneurs, role models to some, who can afford to buy or build a home in cash. One wonders how they make their money but looking at listings in the local newspapers people have real estate advertised with non-negotiable cash prices and someone is buying.
It used to be Zimbabweans abroad who bought and built properties, taking advantage of arbitrage in the forex market but now real estate price is inflated even in the United States Dollar prices. An article in the Business Tech Newspaper attempted to shed light on some of the dynamics of Zimbabwe’s property market and offered interesting insights on how real estate market seems to be thriving in a slumped market.
Although banks do offer mortgage plans which include financing the outright buying of a house, building one or home improvements and cashing out loans on existing property usually at around 50% of the value; the requirements are usually strict. Most local banks tend to target Zimbabweans living abroad for home ownership projects as it’s a well-known secret that the country practically runs on remittances sent by Zimbabweans abroad.
According to the Reserve Bank Of Zimbabwe’s figures, remittances received from the diaspora for 2020 stood at just over US$1 billion, breaking the record that was set in 2015 (US$939 million)
Banks seem to also be cashing in on the real estate game as a number of development projects are being carried out by banking institutions that acquire land and then develop it into housing schemes which they mortgage out for a profit. The land itself is fairly cheap but the value addition in servicing housing stands and putting up low-cost houses turns a tidy profit.
Its ironic that for all talk about land in Zimbabwe, and the revolutions it has fueled, on the market the land itself doesn’t have value but what adds value are the improvements you put on it. People are waking up to this realization that its cheaper to buy your own residential stand and then building a house which suits your budget than trying to buy a completed house.
Due to the high rates of mortgages and the informal economy in Zimbabwe, the majority of people would probably shy away from even enquiring about a mortage without giving it a second thought, but an application similar to the UK Mortgage Calculator might help see how one compares with handy graphs of loan repayment along with monthly and yearly amortisation tables. While the Mortgage Calculator is calibrated in pounds for the UK market it can be adapted for almost any mortgage market in the world and even helps you calculate how much mortgage you can afford based on your income.
I am curious, do you own your home, are you renting, paying mortgages or paid off, inherited a house or other?; you can elaborate in comments. Maybe, you are like me, pretending that being a global citizen means I can’t be tied down with a house, when the truth is I cant afford one, for now….