BEIRUT: Byblos Bank Real Estate’s Demand Index reports a 17 percent decline in the second quarter amid a lack of supporting measures. However, there was a pick-up in demand for housing contingent on tangible and immediate measures.
On August 7, Byblos Bank issued the results of its Real Estate Demand Index for the second quarter of 2019.
The results reveal that the Index posted a monthly average of 46.5 points in the second quarter of 2019, establishing a slump of 17 percent from 56.1 points in the first quarter of the year, and an increase of 6.4 percent from 43.7 in the second quarter of 2018.
In addition, the Index’s average monthly score in the second quarter of 2019 racked in at 64.5 percent less than the registered height of 131 points in the second quarter of 2010, and maintained a 57.6 percent score below the annual peak of 109.8 points published in 2010. It was a 21.4 percent drop relative to the Index’s monthly average score of 59.2 points since its inception in July 2007.
Mr. Nassib Ghobril, Chief Economist and Head of the Economic Research and Analysis Department at the Byblos Bank Group, reported several factors playing key roles in the regression in the demand for real estate in the second quarter of 2019.
“The vague measures in the 2019 budget and the inconsistent statements by opportunistic politicians about mortgage subsidies, led potential buyers to remain hesitant and follow a wait-and-see approach,” Ghobril stated in the report.
Moreover, Ghobril pointed to the banking sector stepping up to fill the gap left by the executive branch since 2009.
“Banque du Liban's economic stimulus package for 2019 filled part of the demand by subsidizing LBP 374 billion, or USD 248 million, in housing loans that were rapidly utilized," Ghobril mentioned.
He added: "It's the responsibility of the executive branch to provide interest subsidies on housing loans for limited-income citizens, as the banking sector has been filling this gap since 2009."
The Chief Economist pointed out that skeptical citizens are waiting for the government to develop its housing policy before taking next steps.
The results of the Index survey report 5.3 percent of Lebanese residents had plans to buy or build a residential property in the upcoming six months, one percent down from 6.3 percent in the first quarter of 2019, and up 0.4 percent relative to the second quarter of 2018.
In comparison, 6.7 percent of residents in Lebanon, on average, had planned to purchase or build a residential unit in the country between July 2007 and June 2019, with this dividend spiking at almost 15 percent in the second quarter of 2010.
To stimulate demand, Ghobril explained, the housing market would need concrete measures to be taken. He also advised that “stakeholders in the sector should start promoting rent as a viable housing choice, as is the case in most other countries."
The Index indicates demand for housing to be highest in the South region, in the second quarter of 2019, as 11 percent of its inhabitants had plans to purchase or build a house in the upcoming six months, almost unchanged from the first quarter of 2019. This was followed by the Bekaa region with 6.9 percent of its residents planning to purchase or build a house in the upcoming six months, an 8.5 percent decline from the previous quarter.
Moreover, 5 percent of residents in the North had arrangements to purchase or build a house, in comparison to 5.7 percent reported in the previous quarter. In addition, 3.3 percent of residents in Mount Lebanon intend to purchase or build a house, a 1.6 percent decline from the reported 4.9 percent in the preceding quarter.
As for Beirut, 3.2 percent of its residents had arrangements to purchase or build a residential unit relative to the 3.8 percent reported in the first quarter of 2019.
In corollary, real estate demand regressed across all income brackets in the second quarter of 2019.
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