Exorbitant prices stalling the housing market

Keikantse Lesemela | Sunday December 8, 2013 21:26

The Real Estate Institute of Botswana President Modiredi Maruping told a First National Bank of Botswana (FNBB) stakeholder discussion in Gaborone this week that sellers are concerned that property stays in the market for a long time because prices are very high.

“An affordable housing market no longer exists because there is limited land, and if there is any, it is not serviced so this results in developers raising prices high,” he said.

He noted that despite the prices rising there has not been a corresponding income increase.

“Commercial banks can give out a loan for a low cost house worth P400,000, of which the client will have to pay P7,000 per month. Who can afford to pay this amount in this economic situation? Even property buyers are fatigued by these increasing prices,” said Maruping. He said affordable housing can be achievable if it is considered holistically. He said the government should review the housing policy and come up with ways that will make property affordable. “Public investments can catalyse affordable housing,” he said.

Acting Director of the Department of Housing, Gaokgakala Rabalone said housing remains a challenge to Botswana, as the country does not have holistic policies that address the situation.

“The Botswana Housing Corporation (BHC) faces the same problem as the private land developers because the land policy is just the same. BHC also is challenged with buying serviced land.

This will require a lot of money to develop resulting in high prices to customers,” said Rabalone.

Meanwhile, citizens have been complaining about the high cost of BHC houses. The corporation’s lowest cost house/flat is priced in the current market in excess of P330,000. Clearly, this shows just how out of reach BHC houses are for many ordinary Batswana. 

Meanwhile, Knight Frank Botswana reports considerably higher yields, of around 11% to 12% for a three to four bedroom executive house in Gaborone, and 12% to 18% for a four bedroom house in Francistown.

The take-off has been strongest in the commercial and industrial sector, but the residential market has followed as rentals are rising. Property prices have picked up significantly, particularly for higher-end properties.