Kampala, Uganda | THE INDEPENDENT | Residential houses prices in Kampala and Wakiso fell between April and June 2020, an exciting time for Ugandans with cash to buy at a bargain according to Uganda Bureau of Statistics (UBOS).
The statistics body says that prices of houses dropped by 3 percent in greater Kampala that is in areas of Wakiso, Kampala and Makindye, Rubaga and Kawempe. Only Nakawa saw an increase in house prices. This information is contained in the Residential Property Price Index (RPPI), which observed prices of houses in April, May and June 2020.
The fall in prices from April is a direct opposite of what had happened in the previous months where prices were going up. This is an indicator that coronavirus had a direct impact on the cost of a house near you.
Ibrahim Mugera, a real estate dealer said it is a buyers’ market currently and anyone with little money can get themselves a property at a bargain. He said people currently don’t have money and those who have are not spending it yet expatriates who usually rent the properties went back home making the industry unattractive.
The months of April, May and partly June 2020 is when Uganda was under strict lockdown over the spread of coronavirus. This affected appetite for house sales with would-be buyers holding onto their money.
According to UBOS, Kawempe and Rubaga had the biggest drop in prices of 13 percent in the quarter between April and June 2020. The prices in this area had previously had a 9 percent increase in the third quarter (January-March) of 2018/19 financial year.
Makindye and Kampala which take the most posh suburbs of the city saw prices drop by five percent between April and June 2020, according to UBOS. This pales in comparison with the huge rise in prices in the previous months.
These findings rhyme with findings by the estate agent Knight Frank which said that in the first six months of 2020, the country saw an increase in the number of residential apartments while occupancy of the same had a 10 percent drop, the biggest in recent times.
Mugera said that there are widespread defaults on rent in the market and investors are not willing at the moment to sink money into the property where no one is willing to rent. In June, Bank of Uganda said it expected the value of their assets in the real estate industry including land and houses decline as a result of the coronavirus (COVID-19) disruption.
As a result, it put limitation on how much banks can lend to those buying real estate, further limiting people’s ability to go for these properties. BOU directed from June 1, 2020, a maximum limit of 85 percent on the loan value ratio (LVT) for the residential mortgages and loans for land purchase wherein value means appraised market valuation.
This meant that the bank can only offer 85 percent value of the property as a loan and you have to pay from your own money the remainder 15 percent. There are banks that have been offering up 100 percent value of the property as a loan. This is not allowed now.