I have been following real estate listings for a while now, on a daily basis. This is what I learnt:
- Most apartments that were put up for sale 6 months ago, are still for sale today. When real estate agents tell you the market is stagnant, it means they are not selling, not that the prices are stable, as they try to portray it.
- Prices are going down. Bank Audi's report noted about 4% decline in February... and an article in Dagpa Iqari stated it was a 5% decline. I am sure I wouldn't have been able to note the decline had it been that minimal.
- Real estate firms would increase the apartment price by an average of 2-3% - a random 'simsar' is likely to put as much as 50,000$ in his pocket. I guess the way it works is this: they ask the owner how much they want for the house, and anything more would be theirs. Whereas real estate firms seem to have a strict percentage they operate on.
- At some point I would look at the same apartment online, on 2 different websites and the price would vary by more than 100$/m, depending on the date posted (both by the owner).
- Businessmen found a big potential in the real estate field as the prices in Lebanon never fell before, and they had reached a poignantly high price. >>> The supply exceeded the demand, thus prices fell.
- The Lebanese economy (as well as the global economy) is agonizing >>> people cannot afford to pay those staggering prices for their apartments, thus prices fell.
- The real estate prices were initially over-valued >>> people refused to invest in them by fear of the bubble... and that would be the most dangerous hypothesis of all. It would mean that they will face a slippery slope and will significantly fall. There's actually an interesting article on Wikipedia on the speculated Lebanese housing bubble, it argues that 'property prices have risen exponentially since 2005 (an average 5-fold increase as of February 2010), while the GDP has risen only around 52% during the same period'.
Will we face a bubble burst soon, or is it a simple matter of supply and demand?