Residential property market caps

Pauline Dikuelo | Friday August 8, 2014 14:25

 

Speaking during a BHC workshop held in Gaborone this week, real estate asset manager at Stanlib, Sethebe Manake noted that the home ownership market is now more flexible for people to invest in as interest rates have gone down. Also, she said banks are now making mortgages more attractive as they shift towards secured lending. “This is the right time to buy property because the home ownership market is now beginning to rebase as the mortgages are more affordable and with the prime rate having dropped from 16.5% to 9 nine in the past five years,” Sethebe said.

In a period of sluggish economic and personal income growth, commercial banks have become more risk averse preferring to advance more of asset-backed loans such as mortgages and vehicle finance instead of unsecured personal loans.

The latest Bank of Botswana (BoB) financial statistics report show that since the beginning of 2012, the property financing by commercial banks have grown by a phenomenal 150 percent to P6.9 billion.

In comparison, vehicle financing advances by banks grew by a modest 20 percent to P1.3 billion while the growth of unsecured personal loans rose by a moderate 22 percent to a total of P14 billion.

Four years ago, BancABC introduced a 100 percent mortgage loan to help Batswana own their own houses.

First National Bank (FNB) and Stanbic bank partnered with the Botswana Housing Corporation in March and launched the ‘BHC Sitting Tenants Campaign’ where the people who have been renting BHC houses for more than 10 years are now encouraged to buy them with the assistance of these banks. Manake, who says property ownership should be regarded as a heritage and investment, urged people to take advantage of the residential property prices that have capped and buy their own houses with the assistance of the financial institutions, which now offers flexible terms to individuals.

“Property ownership is valuable because it’s an asset which is increasing in demand and will always be required as a foundation of any economic activity,” she added.

Manake noted that there has been a demand for low-income housing while rental for middle and high income are stagnating.

For the past 10 years the home ownership prices were high due to the stagnant income levels, which limited the access to the finance. According to Manake, this made it too difficult for people to own property despite that Botswana is the only country that has been allocated land free at a subsidised rate.

When speaking at the same event the Minister of Lands and Housing Lebonaamang Mokalake said that the government is currently working on some initiatives that can help Batswana own their properties.

“My Ministry through the National Housing Policy is currently looking at what the government can do to encourage and support home ownership, encourage innovations in the mortgage market while adequately protecting consumers as well as encouraging production and preservation of homes affordable to those with lower incomes and civil servants,” said Mokalake.

Currently, the SHHA Home Improvement and Turnkey schemes are being implemented to facilitate access to residential plots and affordable housing finance by low-income households. These schemes, which target people earning between P4,400 and P36,400 annually, helps them get loans for extension, renovation or the completion of an existing house.

According to the Real Estate Institution of Botswana (REIB) statistics the government owns about 49 percent of the property, followed by private investors with 26 percent, 18 percent of listed companies as well as seven percent, which belongs to the corporates.