Evolution of Zimbabwe’s housing sector: Is the country a nation of renters?

Zimbabwe’s residential market has experienced a shift towards becoming a rental market and away from homeownership, as more people opt for short-term rental arrangements in urban areas due to economic challenges. In this article we look at the trends in the residential market and population patterns, leading to the conclusion that we have more lodgers…

Zimbabwe Rental Market, Housing Market Zimbabwe

Zimbabwe’s residential market has experienced a shift towards becoming a rental market and away from homeownership, as more people opt for short-term rental arrangements in urban areas due to economic challenges.

In this article we look at the trends in the residential market and population patterns, leading to the conclusion that we have more lodgers in the country compared to property owners. The article will zero in on Harare, seeing that that’s where most of the activity is.

Come to think of it, if you look around your circle of friends or family, I’m pretty confident a majority of them are probably renting. The difference is only in the type of accommodation they are renting.


We have more lodgers than homeowners

Growing demand for rental properties, particularly in the middle to high-income segments, has seen a surge in lodgers and a decline in home ownership as demonstrated below. The latest Zimstat report indicates that the dominant tenure status observed across Zimbabwe is “Owner,” with 58.5% of households owning the dwelling units they occupy. You’re probably thinking this is contradictory to what has been asserted earlier, as it seems we have more homeowners than renters in the market. Don’t be fooled by these numbers. Everything becomes more clearer when you see that the homeowners being referred to here by the ZIMSTAT are mainly in the rural areas. Rural areas have the highest proportion of owner-occupied tenure status, while urban areas have the highest proportion of lodger-occupied housing. Ownership tenure in urban areas is much lower at 32.8%. The tables below provides the numbers . It shows that the country’s 2 biggest cities, there is a higher number of lodgers than homeowners.­

A tenant occupies the whole dwelling unit and generally pays electricity and water charges to the urban authority as if she/he owns the property. The terms of renting are under a written agreement. A lodger rents the whole/part of a dwelling unit, which belongs to an owner/purchaser or is under a tenant. Terms are not normally under a written agreement. (ZIMSTAT)

Data from Zimstat indicates that a majority of Zimbabwean households utilize a single room for sleeping. It can be concluded from this information that these individuals are likely renters or lodgers. According to the report, Harare and Mashonaland West provinces having the highest number of households using only one room for sleeping, at 50.1% and 43.6%, respectively. So if 50% of households in Harare are using only one room, does this mean that they own one room/bedroomed properties? I guess we already have an answer to that question.

Rural to Urban Migration and increase in population

The capital city, Harare, has experienced an increase in population, with a current population of 2,4 million, according to a recent report. Harare and Bulawayo are among the five provinces that experienced in migration according to information provided by Zimstats. Between 2012 and 2022, Harare province had the greatest number of in-migrants 351,569. In 2012 was 2,12 million and in 2022 it was 2,42 million indicating an annual population growth rate of 1.3% between 2012 and 2022. These are people coming into Harare to look for employment opportunities and most of them are renting.

2Inter-Censal Migration In-Flows and Out-Flows by Province 2012-2022

Expensive Mortgages

Mortgages have become increasingly unpopular due to their high prices, making them unaffordable for most people, resulting in decreased uptake. Additionally, high interest rates make mortgages unappealing.

In Zimbabwe, building your own house is the main source of housing. Property developers will offer stands while the buyer is expected to construct a home, typically without any financial assistance, and costs are too high for many common people to afford, the Centre for Affordable Housing and Financing noted. Due to rising property costs that are out of reach for the majority of citizens, Zimbabwe’s rental market has struggled to find high-quality properties at reasonable prices.

According to Palmer Contractors, the average cost of construction per square meter in Zimbabwe typically ranges between $80 to $120. Constructing a basic cottage would amount to roughly $6,400, while a 3 bedroom house would cost around $12,800 and a 4 bedroom home approximately $14,400. These are currently the prevailing standard housing options, although pricing may vary based on location.

We looked at what some local banks offer in terms of mortgages. The average mortgage loan in July 2022 was Z$3,509,093 (US$9,581), with a duration of five to ten years. The price of a home in Zimbabwe ranges from Z$29,830 to Z$44,745 (US$81 to US$122) per square meter.

You’ll find that the requirements for a private mortgage to purchase a house from CBZ Bank are a bit stringent and require proof of permanent employment, a certified copy of ID, and 6 months of bank statements showing income. Many people cannot fulfil those requirements. However, even with proof of constant income, many ordinary Zimbabweans cannot afford the additional costs that come with securing a mortgage. These expenses include:

  • a valuation fee of 1% of the loan amount;
  • establishment fees of 3-6% of the loan amount and;
  • an administration fee of 1% on a reducing balance basis.

The loan only covers up to 75% of the purchase price, based on the applicant’s income and carries a high-interest rate of 54% per annum over a maximum period of 12 months. With the added expenses, the overall cost of borrowing a mortgage is prohibitively expensive for most Zimbabweans.

Another Bank, FBC offers a product for home improvements as well as open market purchase. The product’s tenor is 5 years, with an interest rate of 17%. The maximum loan amount is USD50,000.00, which is determined by one’s income, and the repayment cannot exceed 40% of net income. Again proof of income is required. This is also only available to clients in Zimbabwe earning in foreign currency (Mines, NGOs) and Zimbabweans living abroad (Diaspora).

Given these requirements, costs, and the economic situation in Zimbabwe, it is likely that many ordinary Zimbabweans, even those who are economically active, would struggle to afford a mortgage.

Another important dynamic to look at here is what those providing financing for home purchase and construction are saying.

FBC, in their latest financial report, noted that although mortgage loans are available for home improvements and open market purchases, they remain subdued due to the current inflationary environment.

Mortgage lending remained subdued due to a reduced appetite by the business to lend on a long-term basis in the current inflationary environment.

FBC 2023 half-year results

If people are not getting mortgages to build properties, then where are they living? Does the bulk of the population, have the capacity to make enough money to purchase or construct their own homes? Especially when we look at data on how many people are living under the poverty line.What the data tells us is that most individuals cannot afford, as they are poor.

The percentage of the population in Zimbabwe living under the poverty datum line is approximately:

  • 38.3% in 2019, using the international poverty line of US$1.90 per day per capita.
  • 30% in 2017, using the national extreme poverty line of 2011 PPP US$1.83 per day.
  • 25.8% in 2021, classified as multidimensionally poor.

The building society realized that the money is in the rentals, hence their move to increase investment properties portfolio to anchor capital and increase rental income generation, providing opportunities for property developers to provide rental spaces, as per the latest financial report.

So taking all this into account, the cost of building material and the cost of mortgage, compared to the average earning potential of most Zimbabwean where a person working in Zimbabwe will typically earn around 2,605,500 ZWL per year, which is approximately $6,100 USD. It is evident that most people will opt to rent than attempt owning a property because this is way above their pay grade. The average salary for low-skilled employees in Zimbabwe is $231 USD per month, with the maximum level being $341 USD per month. Whereas, the average salary for administrative personnel in Zimbabwe is from $130 USD to $320 USD per month.

Housing backlog, Waiting Lists and High cost of construction.

Then there is the issue of housing waiting lists. Some people have been in these waiting list for many years without getting the stands to build on, with some reportedly being on the waiting lists since 1982. The housing backlog in Zimbabwe is officially estimated to be around 1.25 million housing units.

Here’s how it works: to get on the waiting list for a council housing scheme, you fill out an application form and pay a fee. You need to renew your registration every year until you’re selected for a house or a plot of land.

Council housing schemes are supposed to prioritize people on the waiting list. When a new project starts, they call in candidates for interviews. They want to make sure you’re still interested in the scheme and that you meet the criteria based on your time on the waiting list and your budget.

Projects come in different shapes and sizes, and not everyone can afford them all. Some people have to wait for upcoming projects because the prices are too high for them. Others have been on the list for decades and never got a house/stand despite their efforts. It’s tough for them, especially when they’ve reached an age where they can’t work as much as they used to.

Despite government initiatives such as the national housing scheme, the housing backlog remains unaddressed. The scheme, which is spearheaded by the government of Zimbabwe, was aimed at delivering 220,000 housing units by 2025. However, there is scant information available regarding its progress. In March, though, the state-owned Herald reported that 180,000 houses had been built towards a goal of 220,000 through public and private projects across the country. However, it is possible that the actual number is much lower.

So where are all these people without houses staying? They are renting. Lodgers/Tenants make up a combined 47.9% of tenure status in urban areas of Zimbabwe.

The high cost of serviced land, construction materials, and inadequate government support are some of the challenges that contributed to this. Eventually, if people can’t get housing from local authorities, because they are unavailable or they are not affordable they eventually end up renting. Thus, driving the market share of rentals up in the residential market.

Builders digest noted that in Zimbabwe, it costs between US$250 to US$500 per square meter to build, compared to an average of US$100 in the region. For example, the average cost of building a house in Zambia per square meter can be as low as 1,700 ZMW(US$77) , depending on various factors such as the type of building (low or high cost) and the location.

There is a housing crisis in the country as demonstrated by the housing backlog mentioned earlier. That number however is just a fraction of the reality. Its probably much higher. Currently, anyone who has a room to spare is thinking of renting it out, taking advantage of the crisis. The rental market in as much as it has ballooned, it has also become very informal. Its no longer reputable agencies offering places for rent but anyone with a house, cottage or backroom. What has also happened is that those with money are now building cottages and backrooms to tap into the growing rental rental market which has proven to be good business for many.

In conclusion, Zimbabwe’s residential market has shifted towards becoming a rental market, due to economic challenges faced by the population, particularly the young and unemployed. Harare has experienced an increase in population due to in-migration, resulting in a growing demand for rental properties. Homeownership has become unaffordable for most Zimbabweans due to the high cost of construction and mortgages, resulting in a significant housing backlog and long waiting lists.

Consequently, the rental market has ballooned, becoming informal and profitable for those who own rental properties. The government’s national housing scheme has delivered some results, but the housing backlog remains unaddressed, and the rental market continues to thrive. Renting has become the only option for many Zimbabweans, and it is likely to remain so in the foreseeable future.

Cover image – Kindel Media|Pexels