Why now is the best time to buy property
The other night I went to a business cocktail and as per usual for these events, the host gave a speech which started with a brief run down of the current economic climate in Zambia; depreciation of the kwacha, lack of liquidity, slower than expected growth, government debt, drought, re-introduction of load shedding etc etc. Woooaaahh!! This was a cocktail for us to network and form business linkages and the host might as well have told us not to bother! And of course, there was the news that dominated the headlines for that week – the liquidation of KCM (Konkola Copper Mines). Frankly, the mood is not one of optimism. And in the diaspora you might be thinking – should I really be investing in property back home? Is this a good time to buy property at home? The answer is YES! Here are 5 good reasons why you should be buying property back home.
- Massive capital appreciation – as the property market boomed over the last three decades, property prices sky rocketed. Many property prices have more than doubled in value in just 5 years. In kwacha terms, values have increased by over 100%. Even through the economic shocks of the kwacha depreciating, some property values have increased by upwards of 35% in dollar terms. And I’m not talking about high end properties which tend to hold their dollar values over time – I’m talking about your simple serviced plots. For example, Chelstone Green and Salama Park were both selling plots of bare land. The average 550 sq.m. plot ranged between US$8,700 – 16,500 in 2012. Today the same plots can fetch between $14,500 – 23,100. If all you did was buy the plots at that time and did nothing but hold them and decided to sell them now – you would get a fantastic return. If you didn’t, don’t feel like it’s too late to invest in property or you’ve missed the boat, reason no. 2 will encourage you to still invest!
- Growing demand – demand for property is still strong and this will help keep prices rising. Zambia has a growing population. The Central Statistics Office states that our population is in the range of 17mn with a 3% growth rate. That means there will be about 500,000 born this year ALONE. Although they will be born all over Zambia, over 40% of them will move to urban areas such as Lusaka, Ndola and Kitwe. Moreover, even though we have a young population, Zambians are living longer with life expectancy peeking at just over 60. So in summary, there are more Zambians living longer and they all need a place to stay – keeping property prices up!
- Strong rental market – The reality is that the majority of Zambians can’t afford to buy their own homes. Some statistics suggest that less than 2% of Lusaka’s citizens can afford to purchase the lowest cost house on offer. In addition, there is a housing shortage of 2 – 3 million units. This means that the rental market remains very buoyant particularly in the segment that caters to the middle to lower end of the market. If you’re away in the diaspora and want to buy an investment property that will service this market, you won’t go wrong.
- The exchange rate – The kwacha has been misbehaving, it has depreciated by 40% in the last six months. But this is good news if you’re a foreign currency earner in the diaspora! This means that if you find an ideal property in kwacha, you can get it for 40% cheaper. You can buy property for a bargain!
- Buyer’s market – In the midst of all the gloomy economic news lies good news for the prepared property investor in the diaspora. While liquidity remains tight, it’s a buyer’s market in real estate. If you’re in the diaspora and have cash to put down towards a property you have a much stronger negotiating position. Now is the time to flex your muscles and demand a lower price or more flexible payment terms!
In summary, during tough economic times, someone always wins. Why not let that be you? Get in touch with me today if you would like to learn more about buying property in Zambia! Send an email to firstname.lastname@example.org