The Covid-19 pandemic and resultant mitigatory measures such as lockdowns, has resulted in decreased chances for home seekers to afford houses, this according to a housing report.
The Africa Housing Finance report says “due to reduced employment opportunities, the COVID-19 lockdown has not improved housing affordability in Zimbabwe.
“This is also due to a general loss of employment and income by diaspora Zimbabweans in foreign countries, with lockdown in host countries resulting in a sharp drop in remittances flowing into Zimbabwe.”
The report adds that the situation in Zimbabwe has also been impacted by the poor economic situation as home seekers cannot afford to get mortgages to buy houses.
“Potential borrowers cannot always afford to raise deposits of an average 25% for housing loans and meet monthly instalments, especially with high interest rates and compressed repayment periods.
“Zimbabwe therefore had a reduction in the number of mortgage loans during 2020.
“This declined from 11 485 as at 31 December 2019, to 8 282 as of 30 June 2020.
“While very few new advances were being made in the low-cost housing sector, large numbers of small loans were being paid off on completion of their terms.”
This unfortunate situation has led to most “aspiring urban homeowners in high- and medium-density areas,” being “limited to the purchase of vacant stands made available by some financial institutions and private developers.”
“Purchase is based on staggered payment terms, and owners are permitted to embark on incremental construction using personal resources or short-term loans from employers or microfinance institutions,” it adds.
Prices for houses in urban areas have continued increasing with some of the cheapest units only found within large-scale development projects.
For a 27 square meter house in Budiriro, Harare, for instance, the price was Z$1 660 000 (US$23,043) as of July 2020.
However, to purchase this unit, a buyer needs to raise a 10 percent deposit of Z$166 000 (US$2 606) and apply for a loan of Z$1 494 000 (US$23 454).
Monthly instalments on this loan are calculated at an interest rate of 25 percent per annum over a 10-year period, and amount to Z$33 985 (US$533).
In addition, proof of household income of at least Z$135 940 (US$2 134) is required, so that instalments essentially represent 25 percent of monthly income.
Such requirements are however beyond the reach of many urban home seekers whose salaries have been eroded by inflation.
This has resulted in many seeking for alternative solutions though cooperatives which are usually infested with corrupt land barons and other swindlers.