Lebanon Housing Demand Falls

Byblos Bank issued the results of the Byblos Bank Real Estate Demand Index on Tuesday for the third quarter of 2016.

The results show that the Index posted a monthly average of 39.5 points in the third quarter of 2016, representing a marginal increase of 1.5% from 38.9 points in the second quarter of 2016, and a decline of 9.8% from 43.8 points in the third quarter of 2015, bi-me reported.

The results of the third quarter of 2016 constitute the eighth lowest level in 37 quarterly readings. Further, the average monthly score of the third quarter of 2016 represents a decline of 70% from the peak of 131 points registered in the second quarter of 2010, and a drop of 64% from the annual peak of 109.8 posted in 2010. Also, it is 38% lower than the monthly trend average score of 62.8 points since the Index’s inception in July 2007.

The low demand for housing in the third quarter of 2016 was reflected in the answers of consumers to the Index’s survey questions, as 4.5% of Lebanese residents had plans to either buy or build a home in the coming six months. In comparison, 7.1% of residents in Lebanon, on average, had plans to buy or build a house in the country between July 2007 and September 2016, with this share peaking at nearly 15% in the second quarter of 2010.

Commenting on the results, Nassib Ghobril, Chief Economist and Head of the Economic Research & Analysis Department at the Byblos Bank Group, said “the results of the third quarter of 2016 confirm the trend of very low demand for residential real estate in Lebanon, as the same factors that caused the original decline in demand persisted.” He noted that “real estate demand in Lebanon has been significantly affected by the low level of consumer confidence due to the high level of political uncertainties and the slow economic growth environment.”

But given the housing market’s deep stagnation since the beginning of 2014, Ghobril reiterated that authorities can help stimulate demand over the short term by reducing by 50% the registration fee of purchased residential units for two years.