LEBANON. Byblos Bank issued today the results of the Byblos Bank Real Estate Demand Index 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.
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, Mr. 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."
Mr. Ghobril indicated "the election of a President after 30 months of deadlock will help improve household sentiment." He noted that "as demand for residential real estate lags the trend in consumer confidence, household sentiment will have to improve substantially and over a sustained period of time in order for real estate demand to pick up."
He added that "Lebanese consumers need to see concrete evidence and tangible solutions that improve their well-being in order for their outlook to turn positive."
But given the housing market's deep stagnation since the beginning of 2014, Mr. 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.
First, this would provide an incentive to prospective or hesitant buyers to save a considerable amount of money, given the very high registration fee that is equivalent to 6% of the price of the purchased property. Second, this would encourage thousands of persons who already bought residences in the past to officially register their transaction, which would increase public revenues."
The results of the Byblos Bank Real Estate Demand Index show that demand for housing in the third quarter of 2016 was the highest in Mount Lebanon, as 5.4% of its residents had plans to build or buy a house in the coming six months, unchanged from the preceding quarter. Beirut followed with 5% of its residents planning to mainly buy a house in the coming six months relative to 4.6% in the second quarter; while 4.5% of residents in the Bekaa had plans to build or buy a house, up from 3.4% in the preceding quarter.
In addition, 3.5% of residents in the South intend to build or buy a house, up from 3.3% from the preceding quarter, while 3.1% of residents in the North had plans to build or buy a house, down from 4.1% in the preceding quarter. In parallel, real estate demand increased among residents earning more than USD 1,500 per month in the third quarter of 2016.
Byblos Bank Real Estate Demand Index is a measure of local demand for residential units and houses in Lebanon. The Index is compiled, implemented and analyzed in line with international best practices and according to criteria from leading indices worldwide.
The Index is based on a face-to-face monthly survey of a nationally representative sample of 1,200 males and females living throughout Lebanon, whereby residents are asked about their plans to buy or build a house in the coming six months. The data segregates the Index based on age, gender, income, profession, administrative district, and religious affiliation.
The Byblos Bank Economic Research and Analysis Department has been calculating the Index on a monthly basis since July 2007, with November 2009 as its base month. The survey has a margin of error of ±2.83%, a confidence level of 95% and a response distribution of 50%. The monthly field survey is conducted by Statistics Lebanon Ltd, a market research and opinion-polling firm.
Photo Caption: Nassib Ghobril, Chief Economist and Head of the Economic Research & Analysis Department at the Byblos Bank Group