Inside Botswana’s property woes
Lack of serviced land in Botswana has been identified as the biggest cause of shortage of accommodation in Botswana. However, critics argue that the issue of lack of serviced land is just one out of the many causes of shortage of accommodation as there are other factors at play.
Upon realizing that Batswana were not active participants in the property market, government took a deliberate decision to restrict eligibility of purchase of Botswana Housing Corporation (BHC) houses to citizens. Those with adequate financial resources dominated the local property market and gained an edge as they continued to accrue more profits. Over time, their wealth has enabled them to hatch a series of buy and sell activities that eventually cemented them as the dominant forces in the property market. The reality of the property market is that only those who are willing and able to buy assume ownership. This meant that many who were unable to make money remained as onlookers. However, of late Botswana’s property market took a dip as properties that went on sale remained in the market for too long, giving credence to the belief that people do not have money to buy.
In an interview with Gazette Business, property expert Modiredi Maruping revealed a striking trend in which property in the lower range of P1000 – P4000 is in high demand and therefore not easily available. This is because many Batswana can only afford properties in the lower range, especially because people’s incomes have stagnated and failed to keep pace with the rising cost of living. While incomes laid dormant, rental prices continued to escalate, creating a mismatch and relegating many people to the lower range.
“That is why those who own high value properties find it difficult to attract tenants,” said Maruping.
He also advised tenants who pay above the lower range to seriously consider taking out mortgages and paying for their own houses. However, he acknowledged the fact that property ownership is daunting for many people because of its binding nature which usually seems like a heavy burden when compared to the flexible conditions of renting.
Maruping also revealed that most Batswana sell their properties because of financial woes.
“Most Batswana are not actively involved in the property flipping game in which property is bought and later sold at a profit,” he said.
In its November 2014 financial statistics report, the Bank of Botswana (BoB) disclosed that there was a trend of loan repayment failures over three years between 2012 and 2014. The statistics show that overdue debts are common in the first three months of the year. The amount of debt escalates between August and September and is at its lowest between April and June. After September the amount of overdue debts drops significantly. Overdue debt was P16 million in 2012, P20 million in 2013 and reached a highest peak of P60 million in 2014.
Maruping could not comment much on fears of a possible property crunch, saying if such happens the market will be correcting itself.
“But it will not be the end of the world. The effects will be felt differently, depending on which end you are sitting on. A property crunch will also not result in any significant dip in prices,” said Maruping.