World Economy

Lebanon Housing Demand Drops

Lebanon Housing Demand DropsLebanon Housing Demand Drops

Byblos Bank on Friday issued the results of the Byblos Bank Real Estate Demand Index for the first quarter of 2016.

The results show that the index posted a monthly average of 42.5 points in the first quarter of 2016, representing a decrease of 12.5% from 48.5 points in the fourth quarter of 2015. The results constitute the ninth steepest quarter-on-quarter decline on record and the ninth lowest level in 35 quarterly readings, bi-me reported.

Further, the average monthly score of the first quarter of 2016 represents a decline of 67.6% from the peak of 131 points registered in the second quarter of 2010, and is 33.8% lower than the index’s monthly trend average score of 64.2 points since the index’s inception in July 2007.

The decline in housing demand in the first quarter of 2016 was reflected in the answers of consumers to the index’s survey questions, as 4.8% of Lebanese residents had plans to either buy or build a home in the coming six months, the ninth lowest quarterly percentage on record.

In comparison, 7.2% of residents in Lebanon, on average, had plans to buy or build a house in the country between July 2007 and March 2016, with this share peaking at 14.8% in the second quarter of 2010.

Commenting on the results, Nassib Ghobril, chief economist and head of economic research and analysis department at the Byblos Bank Group, said “the results of the first quarter show that real estate demand in Lebanon continues to be significantly affected by the high level of political uncertainties, the slow economic growth environment and the low level of consumer confidence.

He added that “the still-elevated asking prices, especially when compared to the per capita income of resident Lebanese, as well as job insecurity and declining work opportunities, are keeping local demand for residential real estate at low levels.”

Further, Ghobril pointed out that “buying a house constitutes one of the most important investment decisions for the Lebanese, and the value of a house is usually the single most important non-financial asset for resident Lebanese. As such, Lebanese households are postponing decisions to make this kind of investment in the prevailing circumstances.”  

In this regard, Ghobril considered that “market dynamics have gradually shifted from a sellers’ market prior to the fourth quarter of 2010 to a buyers’ market since then, and this trend has solidified since 2014 and is reflected by the index’s first quarter results.”