The property sector has bemoaned the paltry 2.21% for mortgage loans extended by financial institutions in 2020 last year saying such a trend is partly contributing to the depression of its market.
Details contained in the Zimbabwe Property Market Report (ZPMR) for 2020 describes the situation as unfortunate for the real estate sector.
“It was announced during the 2021 budget presentation that of the productive loans advanced, only 2.21% and 0.4% were directed towards mortgages and construction respectively, an unfortunate scenario for the real estate sector,” the report said.
“This in a way confirms the assumed position that most purchases are cash transactions. The mortgage market is dying and its resuscitation is underpinned by currency stability.”
The loans fall far below those offered in neighbouring South Africa which enjoys much higher loans extension to support the mortgaging sector.
Market experts believe the support by banks through lending to fund mortgage needs to go a long way to create brisk business for the real estate sector.
The ZPMR further the sector was subdued for the greater part of 2020 with its activities overshadowed by the Covid-19 pandemic.
It observes that the new Covid-19 induced work patterns which encourage remote work also dealt the sector another blow.
“With the pandemic encouraging staff to work remotely, the market was characterised by space surrenders with landlords losing their bargaining power as tenants’ negotiated rentals went downwards thereby lowering returns on properties,” the report said.
This impacted on property capital values. For listed entities in the construction industry, trade was also subdued for the better part of 2020, but fortunes changed as volumes increased around the middle of the third quarter to end of year as demand for their products and services improved.
However other players in the sector like cement manufacturers took advantage of the few available national construction projects to push their sales volumes as demand for their products surged.