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BEIRUT: The new taxes and fees on properties have affected demand for apartments and houses in the third quarter of this year, the Byblos Bank Real Estate Demand Index reported Monday.
“The results show that the index posted a monthly average of 49.6 points in the third quarter of 2017, constituting a decrease of 5.2 percent from 52.3 points in the second quarter of the year and a rise of 25.4 percent from a low base of 39.5 points in the third quarter of 2016. The results for the third quarter of 2017 constitute the 21st highest level in 41 quarterly readings,” the report said.
The Parliament approved a series of taxes including an increase in registration fees for apartments.
Commenting on the results, Nassib Ghobril, chief economist and head of the economic research and analysis department at the Byblos Bank Group, said: “Demand for residential real estate in Lebanon decelerated in the third quarter of 2017 following a 20 percent surge in the second quarter of the year, as the Parliament’s ratification in July of a series of taxes and fees, which covered the real estate sector, derailed the brief momentum of the preceding quarter.”
The report said that the index decelerated by 13.4 percent July and by an additional 11.7 percent in August, before slightly improving by 3.8 percent in September, with the outcome in September representing a retreat of 26 percent from the index’s recent peak of 65.9 points reached in December 2016.
“The index’s results reflect the intentions of the Lebanese to buy or build a house, but these intentions need a conducive environment to translate into sales,” Ghobril said.
Some economists warned against increasing fees on property registration amid an economic slowdown and oversupply of vacant apartments in Beirut and other regions.
Many real estate developers are now compelled to reduce the prices of apartments by up to 20 percent in order to sell the units they built.
“The answers of respondents to the index’s survey questions in the third quarter show that demand continues to be soft, as only 5.6 percent of Lebanese residents had plans to either buy or build a residential property in the coming six months. In comparison, 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 2017, with this share peaking at nearly 15 percent in the second quarter of 2010,” the report said.
Ghobril added that “neither the local macroeconomic dynamics nor the environment backdrop have been supportive of housing demand. But instead of providing incentives to potential buyers, authorities increased various taxes and fees on a sluggish real estate sector.”
Ghobril called on the authorities to reduce the registration fees by 50 percent of the purchased residential units to encourage citizens to buy properties in Lebanon.
“There is a need to stimulate demand over the short term by reducing by 50 percent the registration fee of purchased residential units for two years to encourage thousands of persons who already bought residences in the past to register their transactions, which would increase public revenues,” he added.
The results of the index show that demand for housing was the highest in the north in the third quarter of 2017, as 9.7 percent of its residents had plans to build or buy a house in the coming six months, compared to 7.4 percent in the preceding quarter.
Mount Lebanon followed with 5.7 percent of its residents planning to build or buy a residential unit in the coming six months relative to 7.5 percent in the second quarter of 2017.
© Copyright The Daily Star 2017.
“The results show that the index posted a monthly average of 49.6 points in the third quarter of 2017, constituting a decrease of 5.2 percent from 52.3 points in the second quarter of the year and a rise of 25.4 percent from a low base of 39.5 points in the third quarter of 2016. The results for the third quarter of 2017 constitute the 21st highest level in 41 quarterly readings,” the report said.
The Parliament approved a series of taxes including an increase in registration fees for apartments.
Commenting on the results, Nassib Ghobril, chief economist and head of the economic research and analysis department at the Byblos Bank Group, said: “Demand for residential real estate in Lebanon decelerated in the third quarter of 2017 following a 20 percent surge in the second quarter of the year, as the Parliament’s ratification in July of a series of taxes and fees, which covered the real estate sector, derailed the brief momentum of the preceding quarter.”
The report said that the index decelerated by 13.4 percent July and by an additional 11.7 percent in August, before slightly improving by 3.8 percent in September, with the outcome in September representing a retreat of 26 percent from the index’s recent peak of 65.9 points reached in December 2016.
“The index’s results reflect the intentions of the Lebanese to buy or build a house, but these intentions need a conducive environment to translate into sales,” Ghobril said.
Some economists warned against increasing fees on property registration amid an economic slowdown and oversupply of vacant apartments in Beirut and other regions.
Many real estate developers are now compelled to reduce the prices of apartments by up to 20 percent in order to sell the units they built.
“The answers of respondents to the index’s survey questions in the third quarter show that demand continues to be soft, as only 5.6 percent of Lebanese residents had plans to either buy or build a residential property in the coming six months. In comparison, 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 2017, with this share peaking at nearly 15 percent in the second quarter of 2010,” the report said.
Ghobril added that “neither the local macroeconomic dynamics nor the environment backdrop have been supportive of housing demand. But instead of providing incentives to potential buyers, authorities increased various taxes and fees on a sluggish real estate sector.”
Ghobril called on the authorities to reduce the registration fees by 50 percent of the purchased residential units to encourage citizens to buy properties in Lebanon.
“There is a need to stimulate demand over the short term by reducing by 50 percent the registration fee of purchased residential units for two years to encourage thousands of persons who already bought residences in the past to register their transactions, which would increase public revenues,” he added.
The results of the index show that demand for housing was the highest in the north in the third quarter of 2017, as 9.7 percent of its residents had plans to build or buy a house in the coming six months, compared to 7.4 percent in the preceding quarter.
Mount Lebanon followed with 5.7 percent of its residents planning to build or buy a residential unit in the coming six months relative to 7.5 percent in the second quarter of 2017.
© Copyright The Daily Star 2017.
