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 Golden Sibanda Senior Property Reporter
ACCESS to decent housing remains a major issue in Zimbabwe amid falling aggregate demand due to high finance costs and sustainable high income thresholds for mortgage loans, research results have shown.

HOUSING in Zimbabwe, which has a national but conservative hous­ing backlog of 1,25 million units, remains beyond the reach of many, both indus­try and commerce workers.

Although most banks are still lend­ing to qualified low income earners (earning $750 per month) for mort­gages between $15 000 and $20 000, this has done little to solve the prob­lem of affordability.

According to the Centre for Affordable Housing Finance (CAHF), the threshold for qualification is sig­nificantly above earnings of workers in most industry and commerce and those in Government, especially con­sidering that the cheapest newly built house costs a minimum of $15 000.

This is despite the efforts by devel­opers to improve standard packages, such as pricing a 200 square metre residential stand at $10 000 plus 20 percent deposit, meant to enhance affordability.

CAHF says access to land by devel­opers and the high cost of funding, remain the biggest stumbling blocks hindering affordability of housing.

Most households have nothing to direct towards purchasing houses, as savings were eroded by hyperin­flation, which peaked at 231 percent, as at the last official recorded rate in August 2008.

Those who had saved found them­selves clutching at nothing when the country moved over multi-currency system in 2009, which is however dominated by the US dollar.

“Property firms have adjusted to the economic downturn by creating what they perceive to be more economically viable packages.

“A standard package for a 2000 square metre residential stand has been adjusted to $10 000, requiring a 20 percent deposit and monthly installments averaging $200.

“Despite these attractive packages, declining aggregate demand, high financing costs and high qualifying threshold for mortgages remain a challenge,” CAHF said in its 2017 Hous­ing Finance Yearbook.

Traditional financiers have not been lending to private property developers with some building societies opting to fund their own housing projects.

When financing is availed, the inter­est rates are too high which inadvert­ently pushes property prices upwards and beyond the reach of many.

The fragile economic conditions have also significantly impacted via­bility of companies and therefore employment rates, and income lev­els, which affects home-seekers capac­ity to buy.

CAHF says as at May 21, 2017 default rates on rentals stood at between 45 and 55 percent across the country as the downward trends noted in 2016 continue to slow the property mar­ket in 2017. Landlords no longer demand cash for rental payments with mobile money and bank transfers have become widely acceptable.

To enable low income earners access housing finance, building societies collaborate with employers for loans at subsidized rates.

In attempts to bring affordable housing to low income earners meas­ures have also included partnerships between the banks and city councils.

The land is either given cheaply to the bank that will act as a developer and a percentage split of profits is arranged between the respective City Council and the bank.

While the lending rates, where loans have been availed by most local banks, remain unsustainably high, Zimba­bwe has seen an increase in access and affordability of housing finance.

Although, credit risk is taken into account by housing finance lenders, the interest rates for most borrow­ers remain unchanged with 8 per­cent-16 percent per annum for reg­ular borrowers, 6 percent-10 percent per annum for prime borrowers with low credit risk, and 10-18 percent per annum for borrowers with high credit risk.