May logs high­est real es­tate sales in 2017 amid sta­bi­liz­ing prices

Kuwait Times - - BUSINESS -

The real es­tate mar­ket picked up mo­men­tum in May. Sales rose to KD 289 mil­lion, their high­est level in 18 months and up 37% year-on-year (y/y). The res­i­den­tial and in­vest­ment sec­tors provided sig­nif­i­cant sup­port to the real es­tate mar­ket, with sales in­creas­ing by 23% and 38% y/y, re­spec­tively. Ac­tiv­ity has been rel­a­tively volatile in re­cent months, with three of the last six months see­ing el­e­vated sales, some­thing that could be sig­nal­ing an end to the two year slow­down. Real es­tate prices across most sec­tors con­tin­ued to hold steady, cur­rently off 9-10% y/y.

The res­i­den­tial sec­tor bounced back fol­low­ing a soft April. Sales jumped to KD 138 mil­lion dur­ing the month, on 406 trans­ac­tions. KD sales im­proved by 23% y/y, sup­ported by a 46% rise in the num­ber of trans­ac­tions from a year ago. A surge in home pur­chases was wit­nessed dur­ing the last two months; 233 and 203 homes were sold in April and May re­spec­tively, the high­est since March 2015.

Res­i­den­tial real es­tate prices were flat in May, con­tin­u­ing to show a sta­bi­liz­ing trend. The NBK res­i­den­tial home price in­dex stood at 151.2 point, flat for the month. The in­dex has been sta­ble and in the vicin­ity of 151-152 points for al­most three con­sec­u­tive quar­ters, though it re­mains down 9% y/y. The NBK res­i­den­tial land price in­dex re­treated in May to169.1 points and is down 9.5% y/y. In­vest­ment sec­tor ac­tiv­ity was strong this month, com­pen­sat­ing for Aprilís weak­ness. Sales came in at KD 87.7mil­lion, up38% y/y. The num­ber of trans­ac­tions im­proved as well, ad­vanc­ing by 10% from the pre­vi­ous year.

In­vest­ment build­ing prices logged a slight gain for the month. The NBK in­vest­ment build­ing price in­dex stood at 185.1 points, up 1.7%for the month, a five months high. The in­dex is down 10% y/y, an im­prove­ment from a few months back as it ap­pears also to have bot­tomed out in tan­dem with prices in the res­i­den­tial sec­tor. Com­mer­cial sec­tor ac­tiv­ity picked up this May, fol­low­ing four months of low vol­ume ac­tiv­ity. Sec­tor sales reached KD 62.8 mil­lion on six trans­ac­tions; the largest three trans­ac­tions were a plot in Egaila for KD 28.5 mil­lion and two build­ings in Sharq for KD 20.4 mil­lion and KD 16.8 mil­lion. The slow­down in the real es­tate mar­ket, and the price cor­rec­tion that ac­com­pa­nied it, has started to have an im­pact on hous­ing rent and con­sumer in­fla­tion. The weak mar­ket and a rise in va­cant apart­ments since the end of 2015 have ex­er­cised down­ward pres­sure on rents though the im­pact on in­fla­tion had been elu­sive, un­til re­cently. Eas­ing rent in­fla­tion only be­came vis­i­ble in the hous­ing ser­vices com­po­nent of the CPI in March 2017. Hous­ing in­fla­tion, mostly com­prised of hous­ing rents, slowed from6.4% y/y in 4Q16 to a three-year low of 4.3% y/y in 1Q17.

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