The real estate sector has not been exempt from the effects of fluctuation of the dollar rate in the past couple months however it is important to note that despite the fluctuating prices real estate remains a constant sector in the country.
But with the election year coming, there is expected to be a slight increase of money in circulation, due to political activity and this will have a positive effect on the sector. As a result there will be disposable income for people to invest.
Shakib Nsubuga, Country Manager of Lamudi Uganda, said: “The continued appreciation of the dollar against the shilling has greatly affected the real estate market. The steady weakening of the shilling to the dollar has slowed down real estate investments which has affected not only the real estate sector but other investment sectors.”
This week we share with you some of the effects of the recent dollar rate.
Unstable property prices
The prices of rentals, houses and land in the country have become unstable. Many property prices in the country especially the central region are set in dollars and when converted into local currency, these prices often fluctuate according to the dollar rate. Rentals have faced the biggest effect as their rental fees change every time the dollar rate changes.
Increase in cost of construction
Most construction materials are imported due to the limited supply in the country to meet demand. This means that with steady depreciation of the shilling against the dollar, construction expenses have gone up in the past months. The effect of this is that constructed properties have become very expensive especially for the average Ugandan whose earnings are fixed in local currency.[related_posts]
Increase in interest rates
The appreciation of the dollar has also led to an increase in mortgage rates which has radically reduced the number in home buyers and developers. This has also made financial institutions tighten up on loan processes to reduce on the number of people who might fail to pay back their loans due to the dollar rate.
Finally many people have been cautious while investing in the real estate sector over the past few months while others have completely held off in the past few month but hopefully that will change in the new year.