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ZIMBABWE’s rich are splurging to acquire expensive properties, despite a worsening liquidity crisis in the country. Houses on sale in most wealthy suburbs of Harare have been finding buyers, although at a slow pace. But the high prices that the few rich people are paying to acquire houses have raised questions as to whether the entire economy is facing the liquidity problems.

Property prices in the affluent areas have been surging compared to regional comparatives. A survey by the Financial Gazette indicated that some properties in Harare are fetching as high as US$1,9 million. Aertising agencies had been promoting properties costing as much as US$2 million, an amount some say can purchase farms in other countries.

Media reports said last week the Zimbabwe Revenue Authority (ZIMRA) had taken a keen interest to see if those acquiring expensive properties were paying taxes. This was an indication that even government had been taken by surprise by the high prices being paid for houses in Zimbabwe.

Recent properties that had been aertised on the various web-based agencies now selling properties in Zimbabwe and found buyers include a US$800 000 house in Chisipite, a US$2 million property in Gun Hill, a US$850 000 house in Borrowdale, and a US$195 000 property in Belvedere, all the suburbs in Harare.

“In fact, those properties going for US$220 000 are among the lowest,” said Clifford Sibanda, a property market analyst. “The movement is slow, but those still buying are spending fortunes compared to what is charged for the same houses in South Africa. I think there is a section of the economy that still has access to cash, and these are buying the properties that are expensive, compared to the same properties in the region,” he said.

“Those properties that are going for US$2 million in Zimbabwe cost about 75 percent of that price in neighbouring countries. You can actually buy a farm in countries like Zambia and Malawi with the prices that properties are charged in Zimbabwe,” he said. This has attracted the taxman, who now wants to investigate the sources of funding for those buying expensive properties.

“We actually have an exercise going on, where we are working with the Deeds Office to create a data base of the property sector to ensure that developers and home-owners were complying with taxation laws,” Gershem Pasi the ZIMRA boss was quoted as saying. “This will also assist us in carrying out our audits on home-owners.”

The report said Pasi had said ZIMRA was consulting the Ministry of Finance to come up with a law that allows the tax collector to attach fixed properties belonging to tax evaders. “We want the law to be strengthened so that we can attach immovable properties so that when we see you have (unlawfully) taken money from the company to build mansions, we want to be able to take the property,” he said.

Harare has the highest number of properties on sale, according to most property agencies’ websites, followed by towns and cities in Mashonaland West. In contrast, people in the lower strata of Zimbabwe’s social pyramid will continue to struggle raising funding for houses, in the absence of mortgage funding. The rate at which financial institutions have been issuing mortgages has declined as a result of the liquidity stress in banks.

Even if funding was available, many people will not qualify because they have lost jobs. They have no formal source of guaranteed income, a prerequisite for building societies to process their applications. The problem facing the lower end of the property market is that private sector housing projects that are now available are expensive. But others say the companies must make profit.

“It is not these companies’ fault to price houses at these levels,” said a Harare resident.

“They are in business and they must earn a return on their investments. We must actually commend them for their efforts, otherwise FBC or CBZ would look for other more profitable investments. Government must come up with funds to help low income earners access these houses,” he said.

Source : Financial Gazette