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Monday Market Memo | Will Zimbabwe turn over a new leaf?

December 4, 2017Article by Paul Avery


Britain’s Chancellor delivered a profoundly housing-centric budget last week. Close to 200 tweaks to the sector have been made in budgets since 2010, so the latest crop is worth recapping – especially since most were overshadowed by a showstopping cut in stamp duty for first-time buyers.

  • The extra council tax levy for properties sitting vacant for more than a year may now rise from 50% to 100% if local councils choose to implement it.
  • More guarantees on loans for housebuilders will be offered to encourage new starts.
  • Most interestingly, plans to make foreign investors in commercial property liable for capital gains tax from 2019 may well cause many to look again at residential instead.


Soon after coalition-building talks threw Angela Merkel’s future into doubt, the Bundesbank added insult to injury with a stern warning that house prices in most German cities are 15-30% overvalued compared with rents and other fundamentals. In a culture of low home ownership (52.5%), capital gains are a big bonus for landlords in secondary cities, where rents have been slower to expand. The Bundesbank was explicit that this does not amount to a bubble.


Things are not looking too rosy for the Turkish economy: the lira is at a new low against the dollar and inflation is up to 11.9%. In a positive sign, however, purchases of homes by foreign buyers were up 71% year-on-year in October. That is mostly – but not completely – due to last year’s coup attempt dampening demand at that time. The bargain hunters may be on to something.


Chinese outbound investment is at its lowest point since 2013 after falling 51% in the year to October due to tighter capital controls. Property development sites represented 58% of the total in 2016 so the sector may be re-shaped considerably, though the spending habits of individual investors may be less affected.


An economic resurgence is well overdue in Zimbabwe, where the 37-year rule of Robert Mugabe has mercifully ended. Huge pent up potential will be released if Emerson Mnangagwa’s new government behaves itself and follows through with promises to reform the economy. Hard assets like property have experienced a spike as cash-rich elites squirrel away funds, but it will take time for the market to mature and align with the interests of ordinary people.


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Paul Avery

Paul joined us in 2016 to lead our in-house research efforts, producing reports and guidance for clients as well as the strategic market analysis behind our new project launches. His background is in sustainability in the construction sector, and he is currently being trained in property valuation to further bulk up his investment creds.
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