Property prices are still high, but may drop this year

Kuwait real estate prices in residential areas are still high and even increased compared to last year, despite the pandemic that negatively affected the economy. But economist Hajaj Bukhadour expects property prices in residential areas will drop this year.

He said that there are various factors affecting the real estate prices. “The price of real estate in Kuwait is not regulated by the rules of the market. Besides supply and demand, there are other reasons for real estate performance, including monopoly of land and real estate by businessmen, population growth and others,” Bukhadour said.

He explained that Kuwait’s economy is based on two activities – real estate and stocks.

“Since 2008 (the global financial crisis), local banks do not accept guarantees of stocks for loans, which was common before 2008, as stocks were considered as assets. Banks now only accept real estate as guarantees for loans. But real estate is mostly mortgaged and there is no supply, which affected prices and led to a hike,” he said.

According to economist Homoud Al-Anezi, increased liquidity is behind the high prices of real estate in Kuwait.

“Kuwait is the only country where property prices didn’t drop. Around the world, the average price of a house is around 20 times the annual income of a citizen. But in Kuwait, the figure is much higher. In the past, around 3,000 applications for a government house were withdrawn, while today nobody is withdrawing their application, which indicates that people don’t have resources to buy their own house,” stressed Anezi.