RYAN CHIGOCHE
Lack of mortgage funding is impeding growth in the real estate sector and there is need for partnership between the government and private sector to come up with an ideal mortgage financing plan, an expert has said.
Local banks are reluctant to offer long term loans due to the deteriorating environment which has seen the local currency depreciating against major currencies.
Alexander Millin, the immediate past president of the Real Estate Institute of Zimbabwe (REIZ), told Business Times that mortgage financing will propel the growth of the local property market.
A mortgage refers to a loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments that are divided into principal and interest. The property serves as collateral to secure the loan.
”The engine which drives growth of the real estate sector is mortgage funding. Without it the sector it cannot realise its full development potential. Currently there is no mortgage funding available and this naturally impedes growth In the sector,” Millin said.
He said also underscored the importance of foreign direct investment (FDI) saying the “greater the level of FDI the more likely that the sector will experience significant growth “
Zimbabwe has also been failing to attract FDI due to volatile economic conditions and unpredictability in policy which deter investors.
Economists say infrastructure development is key to attracting investors.
Millin commended the government’s current rehabilitation and construction of different types of infrastructure in the country as they will encourage investment in real estate activities.
However, Millin reiterated that the growth is directly dependent on the resumption of mortgage funding facilities as a sizable number of property developers are heavily reliant on short term loan facilities to keep the projects going.
To provide these mortgage facilities the former REIZ president suggested a partnership between the government and private sector
“There is definitely need for more FDI into the country. The private sector should work closely with the government to craft and implement workable mortgage funding models,” Millin said.
He also called for the urgent review of the Rent Regulation Act of 1982 and the Commercial Premises Regulations of 1983 which he said are a stumbling block for any future development in the property sector.
However the governments devolution policy is expected to be an effective investment towards sector growth particularly the housing and commercial property programme, he said.
