AMMAN -- Trading in the housing market saw a 24 per cent increase during the first three quarters of 2011, making the real estate sector one of Jordan's top performing sectors this year, according to official figures and investors.
The property market went up to JD4.9 billion during the first nine months of 2011 from JD3.9 billion in the same period of last year, according to a report issued by the Department of Land and Survey (DLS).
President of the Housing Investors Society (HIS) Zuhair Omari indicated that the sector's performance this year has almost returned to the level of the boom period of 2006 and 2007, adding that the rebound in the market, severely hit by the global financial crisis of 2008, was due to several factors.
Government incentives to homebuyers helped speed up the recovery of the housing industry, he explained, noting that consumers saved between 8 and 10 per cent on housing purchases due to fee and tax exemptions.
In a bid to stimulate the housing market, the government decided in May 2009 to extend the exemption from registration fees on the first 120 square metres (sq.m.) of apartments sized 150sq.m. or less to apartments sized 300 sq.m. or less.
In June 2010, authorities decided to exempt the first 150sq.m. (instead of the first 120) of apartments sized 300sq.m. or less from registration fees and reduced registration fees and taxes on properties from 10 per cent to 5 per cent.
The decision will expire at the end of this year.
DLS revenues from the January-September period reached JD164.8 million, while the value of fee exemptions homebuyers benefited from during the same period totalled JD158.6 million. Consumers saved a total of JD335.7 million through fee exemptions since authorities took action to stimulate the sector in May 2009, according to the department's report.
Another factor contributing to the recovery, according to Omari, was that prices of housing units remained stable in 2010 and 2011.
After the global economic downturn in 2008, prices of oil and construction materials decreased sharply, resulting in the devaluing of properties in the local market by 15-20 per cent, he elaborated, adding that despite a sharp increase in construction costs as international oil prices rose in March 2010, property values remained nearly unchanged.
Population growth rates also contributed to the rise in the housing sector, according to Omari, who indicated that around 45,000 apartments must be built every year to meet Jordan's increasing need for housing.
As local banks are awash with cash for lending, financial institutions have eased their lending measures this year, the leading housing investor said, but he complained that interest rates on mortgages remain relatively high.
According to Central Bank of Jordan (CBJ) figures, around JD1.5 billion is still available at banks to lend to the real estate sector.
Under CBJ regulations, the maximum limit of credit allocated to the real estate sector by licensed commercial banks should not exceed 20 per cent of overall deposits in Jordanian dinars.
The credit can be used to cover the costs of property construction, renovation, expansion and purchase.
A CBJ official told The Jordan Times previously that the loans extended to the property sector reached JD2.2 billion by the end of July or 12 per cent of the overall deposits at local banks, leaving plenty for further lending.
Out of nearly JD19 billion in deposits, the remaining 8 per cent available for housing loans stands at around JD1.5 billion.
Housing investors expect trading in the real estate sector to exceed JD6 billion by the end of this year, which is close to figures registered in 2006 and 2007, Omari said, pointing out that investors, previously pessimistic about the market's performance, now consider 2011 a "very good year" for the industry.
© Jordan Times 2011
