Real estate market prices exaggerated, say experts

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Continued hike in prices have unhealthy repercussions

KUWAIT CITY, March 22: Real estate experts have unanimously agreed that the current prices in the real estate market are exaggerated, and have unhealthy repercussions on the market, reports Al-Qabas daily. They indicated that this matter constitutes a burden on the citizens who wish to obtain their dream home, insisting that a serious stance must be taken to find solutions to limit the crazy price hikes in the real estate market. The experts said they expect the rate of increase in residential prices to continue in the year 2021 from five to ten percent. In an interview, they stressed that a state of stagnation may occur in the real- estate sector after the month of Ramadan and with the third quarter period, which may help in correcting the prices.

The Vice-President of Real-Estate Brokers Union Emad Haidar explained that the residential sector is currently going through an exceptional phase, as all residential areas are witnessing an increase in prices despite the general economic situation of the country. Other real estate sectors are being affected by a decline in circulation and prices, “otherwise we find the residential real estate sector to be active and witnessing an increase in circulation”. He indicated that the prices in the residential sector are exaggerated, adding that, “today everyone is complaining, and blaming the officials as well as the speculators and traders”.

Housing
Haidar went on to explain that the housing sector is currently coherent and the fate of the properties cannot be predicted after five years. However, the readings indicate that the market share is up and the curve is upward until the price reaches the ceiling. Each area has a higher price ceiling, and every rise has a fall.

There is an ongoing price correction process, which is a real estate cycle that takes its time. In this regard, the founder and general manager of Al-Faris Real-Estate Company Yousef Al-Faris explained that the residential real estate prices in 2019 were gradually escalating and were not exaggerated. The rise was justified until the beginning of 2020. However, the turning point was the start of the COVID-19 pandemic and the associated repercussions represented in the global situation, lockdown, and the accumulation of housing demands during the lockdown period imposed by the government, as well as the low interest rate and the increase in the borrowing ceiling. All these factors led to the housing sector movement signifi- cantly during the last period.

There will be a corrective price slide as a result of the huge hikes during the last period. The market will witness a recession phase after the month of Ramadan and during the third quarter of this year. Refl ecting on the valuation of residential lands and the rise in house prices on the real estate market, Al-Faris said, “The evaluation is one of the important elements in the real-estate market prices, so we always recommend the accuracy of the evaluation with the real estate evaluator and the need to monitor the market continuously.

The continued rise in prices in the sector for a long time is an unhealthy factor, as the reasons for the continuous rise lie in the lack of land, and speculations as well as the increase in the trend towards private housing, which has become limited to certain areas, making the rate of demand higher than supply”. Regarding his expectations of the price trends of residential lands and houses in the next five years, Al-Faris explained that it is a long period and difficult to analyze, because real estate has internal infl uences, such as the adoption of new laws, the supply and demand rate and the internal economic conditions. There are also external infl uences that affect the market, such as the global economic crisis in 2008.

This news has been read 43847 times!