Zimbabwe’s real estate market has been a hot topic in recent years, with property prices continuing to soar. Whether you’re a first-time buyer or an investor, understanding the factors driving these high prices is crucial. In this article, property.co.zw explores why houses are expensive in Zimbabwe and what this means for buyers, sellers, and investors.
- Limited Land Availability
Zimbabwe’s urban centres, particularly Harare, Bulawayo and other major cities, face a shortage of available land for residential developments. As demand outstrips supply, prices for residential plots continue to rise. For instance, a 1,000 square meter plot in Harare’s prime suburbs like Borrowdale or Mount Pleasant can cost between $40,000 and $100,000, driving up the total cost of homeownership. -
Rising Construction Costs
The cost of building materials in Zimbabwe has skyrocketed in the last decade due to inflation and limited local manufacturing capacity. Most materials such as steel and tiles are imported, making them susceptible to currency fluctuations. A Zimbabwe National Statistics Agency (ZIMSTAT) report highlights that construction costs increased by 25% in 2023 alone, further compounding the issue. -
Inflation and Currency Challenges
Zimbabwe has a history of hyperinflation, which has had a ripple effect on property prices. While the introduction of the Zimbabwe dollar was meant to stabilise the economy, persistent inflation and exchange rate volatility mean that property prices often increase to hedge against devaluation. For instance, houses priced in US dollars have become a preferred option, further excluding many potential buyers who earn in local currency. -
High Demand for Urban Housing
Urbanisation in Zimbabwe has accelerated, with an estimated 35% of the population now living in urban areas. This shift has driven up the demand for housing in key cities like Harare and Bulawayo. According to the Ministry of Housing and Social Amenities, Zimbabwe faces a housing backlog of over 1.5 million units, which places significant upward pressure on property prices. -
Slow Mortgage Market Development
The lack of affordable financing options is another reason houses are expensive in Zimbabwe. Mortgage interest rates can reach as high as 18-25% per annum, making home loans unattainable for most middle-income earners. Moreover, financial institutions often require hefty down payments, further limiting access to homeownership and keeping demand high in the cash-buyers’ market.
(The absence of mortgages limits supply, especially for low- and middle-income groups, which drives up prices for the little stock available. With limited mortgage access, only a small group—those with U.S. dollars or diaspora income—can afford to buy homes outright)
- Investment Demand
Zimbabwe’s real estate market is viewed as a safe haven for investors seeking long-term value. Many investors see property as a hedge against inflation and a way to preserve wealth in an unstable economic environment. This has led to increased competition for prime real estate, especially in high-demand suburbs, pushing prices even higher. -
Lack of Government Interventions
Although there have been efforts to develop affordable housing projects, these initiatives have not kept up with demand. The limited availability of low-cost housing options forces many buyers to compete for higher-end properties, inflating prices across the board.
- Expensive Legal and Transaction Fees
The cost of acquiring property in Zimbabwe includes several additional expenses, such as legal fees, transfer duties, and taxes. These fees can add up to 10-15% of the property’s purchase price, further increasing the overall cost of homeownership.
NewZWire
