The index that tracks demand for properties in Lebanon improved in the third quarter of 2018 after the Parliament approved the allocation of LL100 billion ($66.6 million) for mortgage subsidies, according to the Byblos Bank Real Estate Demand Index. The report said the increase is based on citizens’ expectations rather than on a shift in the outlook for mortgage subsidies.
“The results show that the index posted a monthly average of 51.4 points in the third quarter of 2018, constituting an increase of 17.4 percent from 43.7 points in the second quarter of 2018 and a growth of 3.7 percent from 49.6 points in the third quarter of 2017. The index decreased by 19.3 percent in July and by 14.2 percent in August, but increased by 26.3 percent in September,” the report said.
The Central Bank temporarily suspended its subsidized housing loan program at the end of 2017, a move that had a major negative effect on the real estate market.
Many real estate developers were forced to freeze the construction of residential units in many parts of the country after the demand for houses dropped drastically.
The developers say that the market will pick up once the government is formed and the Finance Ministry starts the subsidy program.
Commenting on the results, Nassib Ghobril, chief economist and head of the economic research and analysis department at the Byblos Bank Group, said: “The increase of the index in the third quarter of the year followed the Lebanese Parliament’s vote in September to allocate LL100 billion, or $66 million, to subsidize interest rates on housing loans, given the suspension of subsidies since the beginning of the year.
“As a result, the new law raised the expectations of citizens that subsidized mortgages will resume, which triggered the jump of the index in September.’’
However, Ghobril cautioned that “the increase of the index in the third quarter should not be viewed as a change in the current dynamics of the housing market, as the improvement comes from a low base following the first and second-quarter results, and is only based on the expectations of citizens.”
The index’s average monthly score in the third quarter of 2018 is 61 percent lower than the peak of 131 points registered in the second quarter of 2010, and remained 53.2 percent below the annual peak of 109.8 points posted in 2010.
“The answers of respondents to the index’s survey questions in the third quarter of 2018 show that 5.8 percent of Lebanese residents had plans to either buy or build a residential property in the coming six months compared to 4.9 percent in the second quarter of the year and to 5.6 percent in the third quarter of 2017. In comparison, 6.7 percent of residents in Lebanon, on average, had plans to buy or build a residential unit in the country between July 2007 and September 2018, with this share peaking at nearly 15 percent in the second quarter of 2010,” the report said.
The Daily Star