Government has been advised to act on the Botswana property bubble before it goes burst as it was the case with the subprime mortgages in the U.S that brought the world’s largest economy to its knees.
Property market commentators are divided on whether there will be a burst, but to a layman, America is a good example of governments allowing the free market to take its course.
Some NGOs are already mulling petitioning cabinet, which has confirmed it has no ideas of addressing shortage for the many Batswana amidst the property boom.
“It happened in the U.S and Eurozone; why can’t it happen here,” said one participant at the Botswana Guardian organised property breakfast seminar last week.
Botswana is seeing the biggest property boom, which is bailing out the economy that relies heavily on exports.
According to a recent Investment Property Databank (IPD) report, Botswana property is the second after Hong Kong in terms of returns although the sector was hit by the recession and government three year development freeze.
The country is seeing a growth in malls and office space with demand for residential properties rising in return driving up the prices up in a country whereby 73 percent of household income falls below most mortgage threshold.
Consumers are calling on government to regulate land and mortgaging pricing by commercial banks in a bid to pre-empt the property burst.
One analyst told a local daily newspaper that a property; mainly the office space is nearing an overheating point, but that argument has been dismissed by Real Estate Institute of Botswana (REIB).
Secretary General of REIB, Modiredi Maruping, however admitted it is hectic in the market at the moment as people are buying and selling properties.
“I cannot stay here and say there is no bubble, but there is not yet a burst,” Maruping said.
“What I can say is that government can regulate. Banks can regulate and give loans to people who can afford these loans”.
Maruping argued people are hungry to build, but the problem is unavailability of serviced land adding that if serviced land was released to thousands of people on the waiting list ‘we will not have pressure on the prices’.
“The market will correct itself, let us not call it a crisis,” he advised. “I still belief it is a perception that this bubble will burst. The property market like any other sector has a cycle,” he said, adding that the future events will depend on the episode is managed.
“I think the future is still good for the market,” Maruping said, adding the downward trend will come whether it is 2 or 10 years it is still to be seen.