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Zimbabwe

Overview

The population of Zimbabwe was estimated at 14.6 million1 people as of 31 December 2019. Industrial capacity utilisation declined from 48.2 percent in 2018 down to 36.4 percent in 2019.2 This can be attributed to successive droughts that reduced electricity generation, with negative spillover effects in other sectors of the economy. Imports, as opposed to export manufacturing, have dominated the Zimbabwean economy, particularly because businesses source raw materials and equipment in foreign currency. The pressure on a limited pool of currency generated by mining, tobacco and tourism has resulted in a weak local currency exchange rate. Economic performance was further negatively affected by Cyclone Idai, a deadly hurricane that ravaged the eastern parts of the country during March 2019. The cyclone caused enormous destruction to houses, infrastructure and livestock, killed an estimated 344 people and left more than 270 000 people homeless.3 After this disaster the economy contracted by -6.5 percent, but was poised to achieve a three percent GDP growth in 2020.4

Announced in November 2019,5 Zimbabwe’s 2020 National Budget highlighted the construction industry as a key contributor to gross domestic product (GDP) growth and employment creation. A broad range of remedial activities in housing and related infrastructure were planned for 2020 and an amount of Z$2.68 billion6 (US$42.057 million) allocated. However, the unforeseen effect of COVID-19, accompanied by a severe drought, resulted in a harsh economic downturn. After six months of a disrupted economic environment, GDP growth for 2020 was revised to reflect a -4.5 percent contraction in July 2020.8 Many programmes planned for the year were shelved as resources were redirected to health-related expenditure, including water supply and sanitation programmes.9 Industrial capacity utilisation is now down to 27 percent.10

In a further effort to bring transparency and wider participation in the trading of foreign currency, the Reserve Bank of Zimbabwe introduced a weekly Foreign Exchange Auction Trading System in June 2020 aimed at narrowing the gap between the official and unofficial market exchange rates, and also at stabilising commodity prices.11

On the interest rate front, as the pulse of business weakened due to the COVID-19 lockdown, the Reserve Bank’s overnight accommodation (repo) rate was reduced to stimulate business activity. Originally at a rate of

KEY FIGURES

Main urban centres 

Harare, Bulawayo, Gweru, Mutare

Exchange rate (1 July 2020): 1 USD = [a]

63.74 Zimbabwean Dollar (ZWD) 0.5 Zimbabwean Dollar (ZWD)

1 PPP$ = [b]

Total population [b] | Urban population [b]

Population growth rate [b] | Urbanisation rate [b]

14 645 468 | 4 717 305

1.42% | 1.42%

GDP per capita (Current US$) [b]

Percentage of population below national poverty line (2017) [b]

Unemployment rate (% of total labour force, national estimate) (2017) [b]

Proportion of adult population that borrowed formally (2017) [b]

Gini coefficient (2017) [b]

HDI country ranking (2018) [c] | HDI country score (2018) [c]

US$1 464

54.4%

5.2%

4.0%

44.3

150 | 0.56

GDP (Current US$)  [b]

GDP growth rate [b]

Inflation rate

Yield on 10-year government bonds Lending interest rate [b]

US$21 441 million

-8.10%

5.16%

n/a

16.80%

Number of mortgages outstanding [d]

Value of residential mortgages (Current US$)(2019) [e]

Typical mortgage rate | Term | Deposit [f]

Ratio of mortgages to GDP

Number of mortgage providers [e]

Number of microfinance loans outstanding [e]

Value of microfinance loans in local currency units [e]

Number of microfinance providers [f]

8 568

25% | 10 years | 25%

US$13.78 millionn/a

0.06%

16

454 428

632 670 000 ZWD

233

Total number of formal residential dwellings in the country

(2017) [g]

Total number of residential properties with a title deed (2019) [g]

Number of formal housing units built in this year

Price of the cheapest, newly built house by a formal developer or contractor in an urban area in local currency units [h]

Size of cheapest, newly built house by a formal developer or contractor in an urban area [i]

Typical monthly rental for the cheapest, newly built house (2019) [j]

Cost of standard 50kg bag of cement in local currency units [k]

Type of deeds registry: digital, scanned or paper [l]

World Bank Ease of Doing Business index rank [l]

Number of procedures to register property [l]

Time to register property

Cost to register property as share of property price [l]

World Bank DBI Quality of Land Administration index score (0-30) [l]

n/a

256 780

n/a

1 660 000 ZWD

23m2

1 500 ZWD1 500 ZWD

850 ZWD (US$13.36)

Paper

140

5

29 days

7.3%

10

Percentage of women who own a house alone: Total |urban (2015) [k

Percentage of households with basic sanitation services:

Total | Urban (2015) [k]

Percentage of households with no electricity: Total | Urban (2015) [k]

Percentage of households with 3+ persons per sleeping room:

Total | Urban (2015) [k]

Percentage of urban population living in slums (2018) [n]

5.6% | 4.0%

37.0% | 46.5%

66.3% | 18.8%

29.6% | 26.9%

33.5%

NB: Figures are for 2020 unless stated otherwise. Member organisations of the African Union for Housing Finance (AUHF):

Central Africa Building Society (CABS)

FBC Building Society CBZ Bank Limited

Homelink (Pty) Limited

Mr Chimutsa Colin, Honorary Member Steward Bank Limited

FBC Building Society

Homelink (Pty) Limited

Steward Bank Limited

[a] Xe.com

[b] World Bank World Development Indicators

[c] Human Development Reports, United Nations Development Programme

[d]BancABC, CABS, CBZ, FBC, Homelink, Nedbank, NBSNMB Bank, POSB, Steward Bank, Stanbic and ZB B Soc

[e]Zimbabwe Association for Housing Finance

[f] Reserve Bank of Zimbabwe

[g]Zimbabwe Association of Microfinance Institutions

[h] Zimbabwe Deeds Registry

[i] Paint & Hardware Zimbabwe

[j] World Bank Ease of Doing Business Indicators

[k] Demographic and Health Surveys, USAID

[l]United Nations Human Settlements Program

(UN-HABITAT)

70 percent in September 2019, the rate was cut in March 2020 to 25 percent, down from 35 percent in November 2019, and reduced even further to 15 percent in April 2020. However, the overnight accommodation rate was increased again to 35 percent in July 2020, in order to discourage speculative borrowing; stabilise the newly introduced foreign exchange auction system; and curb inflation.12 Mortgage interest rates have mainly fluctuated between the 25 percent to 36 percent level from 2019 into 2020 during the lockdown period, despite rapid changes in the

overnight accommodation rate. From a housing perspective, the property market during 2020 remains disrupted by widespread uncertainty over the value of the local currency, which has influenced potential sellers to hold onto their properties. The unaffordability and unavailability of mortgage finance frustrates aspiring homebuyers, and new housing is inhibited by inflationary increases in the cost of building materials. However, the demand for affordable housing continues to increase, spurred by rural-to-urban migration. This has resulted in the mushrooming of illegal settlements on the periphery of major cities and towns. In many cases, rogue land barons have taken advantage of the circumstances and haphazardly demarcated and sold pieces of land, some smaller than the stipulated minimum size of 70 square meters. This has prompted incremental construction of structures close to each other, creating clusters of illegal settlements without running water and proper sanitation. In 2014, 60 such settlements existed in and around the capital, Harare.13 An estimated one in four urban dwellers live in these slums.14

Reacting to the pandemic, in April 2020, the government promulgated deferment of rents and mortgage payments during the lockdown period, which have to be cleared in staggered payments on expiry of the lockdown.15 Some tenants have taken advantage of these measures but most borrowers continue to service their bonds, and therefore loan-servicing trends have not been significantly affected. The government also committed to providing assistance of Z$200 (US$3.14) to vulnerable families per month for three months from April 2020. In July 2020, the government made Z$35.5 million (US$557 300) available for the shelter of homeless people and Z$50 million (US$784 437) for establishing quarantine centres.16 Due to budgetary constraints, however, no subsidies are offered for housing. The government established a National Disaster Fund to which entities made contributions for the benefit of the less privileged.v

Access to finance

Formally, Zimbabwe has 19 registered financial institutions, made up of 14 commercial banks and five building societies. The building societies have traditionally provided mortgage finance in terms of their licences, while 10 banks have been granted mortgage lending approval by the Reserve Bank. This was achieved due to an amendment of section seven of the Banking Act of 2000 to include consumer and mortgage credit as a banking activity in 2015.17 Since 2004, the Reserve Bank has also been a player in the mortgage sector through a nonbank subsidiary that it formed to serve the diaspora market.

Potential borrowers cannot always afford to raise deposits of an average 25 percent 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

For aspiring urban homeowners in high- and medium-density areas, current options have mostly been 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.

Zimbabwe also has a total of 217 registered microfinance institutions which reflected a consolidated loan book of Z$469.20 million (US$7.36 million) as of 31 March 2020. The bulk of these loans provide clients with economic livelihoods and business working capital and are not directed towards housing finance.18 The need for financial solutions that are suitable for incremental house construction has, over the past five years, influenced the emergence of housing microfinance. The solution is pioneered by organisations such as ShelterSol, which works with some housing cooperatives, but is yet to be fully embraced as an alternative to traditional mortgage finance.

In 2019, Shelter Afrique, a continental housing financial institution based in Kenya, approved Z$1.27 billion (US$20 million) of its lines of credit to some Zimbabwean banking institutions, the proceeds of which were disbursed in 2020.19

COVID-19 response

When Zimbabwe had recorded seven COVID-19 positive cases and one death, the President announced a 21-day national lockdown commencing on 31 March 2020 during which businesses were closed, with the exception of essential services. On expiry of the 21-day period on 19 April 2020, the lockdown period was extended by a further two weeks.

A ban on using currency other than the Zimbabwe dollar, imposed in June 2019, was lifted in March 2020 to make it easier for the public to conduct business during the pandemic.

On 29 April 2020, the Government promulgated deferment of rents and mortgage payments. The arrear rents and instalments, however, have to be cleared in staggered payments on expiry of the lockdown period. Furthermore, on 16 July 2020, the government made Z$35.5 million (US$557 300) available for all homeless people to be placed in various shelters and Z$50 million (US$784 437) for establishing quarantine centres.

Affordability

Within the medium-density segment of urban housing, stand size ranges from 301 to 1 000 square meters. This is typical of the housing in the suburb of Msasa Park, Harare, featured on an online website on 12 July 2020. Here, house prices range between Z$3 187 000 (US$50 000) and Z$4 143 100 (US$65 000).20 Most sellers, however, are still reluctant to accept local currency for houses. With the unavailability of US$ dollar mortgages and the unaffordability of Zimbabwe dollar loans, sellers struggle to find buyers for their properties. Salaries of middlemanagement workers who normally buy in the medium-density segment have not kept track of rising inflation rates and many cannot afford mortgages. Deposits of 25 percent of the purchase price are almost impossible to achieve as inflation has reduced individual saving reserves. Many homeseekers in this segment therefore resort to the popular route of buying stands and building incrementally

The high-density segment in Zimbabwe is referred to as the low-cost housing sector. Projects undertaken by developers in recent years have sought to address the housing backlog, estimated at 1.3 million units,21 at this level. Six out of seven institutions in the country that are members of the African Union for Housing Finance (AUHF),22 have been the main sponsors of large-scale, low-cost housing projects in urban centres in recent years and have constructed over 5 000 lowcost units in Harare, Bulawayo and Victoria Falls. On-going and planned projects will create an estimated 23 000 units and serviced stands, the bulk of which will be for the low-cost housing sector, within the next five years.23

Price-wise, some of the cheapest units are 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. 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. In an environment in which employment is decreasing and inflation is eroding disposable incomes, potential buyers of highdensity housing can no longer afford to buy houses. In July 2020, developers of the Budiriro24 project were still to clear the remaining stock of units completed in 2018.

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 diasporic Zimbabweans in foreign countries, with lockdown in host countries resulting in a sharp drop in remittances flowing into Zimbabwe. Migrant income peaked at a total of Z$921.7 million (US$14.5 million) in 2019,25 but is projected to decline by 20 percent in 2020.26 In addition, COVID-19 has halted the completion of houses under incremental construction as they were incomplete and not ready for occupation; as a result, many families continue to live in uninhabitable conditions without water and sanitation.

Housing supply

ZIMBABWE

Annual income profile for rural and urban households based on consumption (PPP$), 2019

PPP$40 001 – PPP$10 000 000

Screenshot_24.png

PPP$23 001 – PPP$40 000

PPP$12 001 – PPP$23 000

PPP$8 001 – PPP$12 000

PPP$5 001 – PPP$8 000

PPP$3 601 – PPP$5 000

PPP$2 401 – PPP$3 600

PPP$1 601 – PPP$2 400

PPP$801 – PPP$1 600

<PPP$800

No. of households (thousands)

Population:

14 645 468

Urbanisation rate:

1.42%

Cost of cheapest newly built house:

1 660 000 ZWD

House price PPP$:

PPP$3 320 000

Urban households that could afford this house with finance:

4.39%

1 PPP$:

0.50 Zimbabwean Dolla

Housing supply

Statistics last published by the Zimbabwe National Statistics Agency in 2017 show that the country had 1 119 451 (34.39 percent) urban and 2 136 102 (65.61 percent) rural households. The average household size for urban areas was lower with Harare recording 3.7 persons and rural Matabeleland North recording the highest average of 4.6 persons. The overall national average was 4.2 persons.27

Of the urban properties, 36.9 percent had either freehold title or municipal leases, while 50.6 percent were tenants and lodgers. A further 12.5 percent lived in accommodation provided by employers. In rural areas, 82.5 percent of households owned their dwellings and another 17.5 percent were in employer-provided accommodation, mainly teachers, the police and other public sector employees who occupied government houses.

The new Zimbabwe National Human Settlements Policy developed during 2019 seeks to broaden the perception of housing beyond towns and cities to include rural villages, farm and mine compounds, business centres, and rural and district service centres. This should enable collection of relevant data in the future.28

The housing backlog in urban areas is about 1.3 million,29 concentrated within the high-density sector. The existing stock of housing in this sector is largely inadequate, as many families share houses with lodgers, resulting in crowded and unhealthy living conditions. Demand for accommodation is amplified by the creation of 16 new universities in urban centres without sufficient on-campus accommodation for students. More than 15 000 students do not stay in campus accommodation and therefore lodge in high-density and informal areas.30

n 2020, COVID-19 disruptions have forced many diasporic Zimbabweans (estimated to be over four million), to return home due to widespread loss of income in their host countries. About six thousand people had already returned to Zimbabwe by 22 May 2020 and many more are expected.31 COVID-19 containment measures such as social distancing will therefore be extremely difficult to enforce as living conditions become more crowded, particularly in informal settlements.

The housing backlog in Zimbabwe has also been badly affected by the inflationary cost of building material from 2019 to 2020. This, coupled with high costs of purchase, has threatened the viability of multiple-unit turnkey projects in the lowcost housing sector. In November 2019, one of the largest cement producers in the country, Lafarge Zimbabwe, reported a 19 percent year-on-year drop in domestic consumption due to declining demand from homeowners.32 During May 2020 the company painted an even gloomier picture by predicting a 30 percent year-on-year decline in sales volumes in 2020 due to the pandemic.33

Property market

The Deeds Registry of Zimbabwe is responsible for title registrations to immovable property and mortgages thereon. Zimbabwe was ranked 109 out of 190 countries in the World Bank Doing Business 2019 and 2020 reports on the “registering property” topic, based on transfer of commercial property. Although the overall ranking remained unchanged, the score based on steps, time and cost involved in registering property improved from 58.2 percent in 2019 to 59.5 percent in 2020, largely because of three positive policy reforms made for registration of property in line with Doing Business recommendations since 2008. These include a reduction in Capital Gains Tax, the launch of an information website and a reduction in transfer time. Negatively, however, conveyance fees have increased. These are charged according to a tariff set in conjunction with the Law Society of Zimbabwe and are about five percent of the price of the property being registered.34

In total, 197 estate agent firms are in operation, which facilitate the negotiation and transfer of properties.35 Property prices across all segments in the country have been difficult to track because of divergence in market perception of the relative currency values. Sellers generally set prices in US dollars and express them in local currency values, converted at varying market rates. These dual prices are sometimes quoted on property websites.36 This emphasises that Zimbabwe has a buyers’ market for holders of foreign currency, as sellers are reluctant to accept payment in local currency. This has had the effect of reducing property prices by an average 20 percent year-on-year in real terms.37

Policy and legislation

n a move that demonstrated the government’s desire to engage with housing issues, a new Ministry of National Housing and Social Amenities was created in November 2019. Previously, housing fell under the Ministry of Local Government, Public Works and National Housing. The principal statutes that govern housing matters are spread over four Ministries:

  • The Regional, Town and Country Planning Act is administered by the Ministry of Local Government and Public Works, for the identification of land for housing;

  • The Ministry of Lands, Agriculture and Rural Settlement administers survey functions set out in the Land Survey Act;

  • The Ministry of Justice, Legal and Parliamentary Affairs administers title registration and related functions in the Deeds Registry Act; and

  • The new Ministry of National Housing and Social Amenities is served with operationalisation of the Zimbabwe National Human Settlements Policy.

​The new Human Settlements policy extends the scope of housing beyond urban centres to rural areas and also captures the government’s preference for vertical development of flats as opposed to stand-alone units.38

Opportunities

The following opportunities exist in Zimbabwe:

​

  • Rental housing: Given that there are employed people who are not likely to acquire their own homes and are living as tenants or within informal settlements, opportunities exist for the construction of stand-alone or highrise buildings.

  • Student accommodation: There is an acute shortage of affordable student accommodation in urban centres where new universities and colleges have been established.

  • Housing microfinance: There is a gap for the entry of microfinance lending in the country which has, up to now, been directed towards consumptive and business working capital purposes.

  • Modular construction methods: There is a fixation with brick and mortar structures in Zimbabwe. Opportunities thus exist to promote modular construction methods that produce durable houses over a faster construction time.

H

Website

CABS: https://www.cabs.co.zw

CBZ Bank: https://www.cbz.co.zw

Estate Agents Council: https://eac.co.zw/registeredfirms

FBC Building Society: https://www.fbc.co.zw

​

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