Do GCC real estate prices have to fall further to make home finance work? « ArabianMoney

The youthful GCC mortgage sector is presently being held back by asking prices that simply make it too expensive for most would-be mortgage customers to own a home. Therefore, GCC house prices will have to fall even further if the local mortgage industry is to begin to finance the real estate sector properly, or so 120 delegates to the inaugural GCC Mortgage Summit 2010 heard in Bahrain today.

Central Bank of Bahrain Executive Director of Banking Supervision, Khalid Hamad said: ‘Current prices are not affordable or realistic, and further falls are necessary and then economic fundamentals will start rebuilding market confidence.

‘The fundamentals of the region are good, underpinned by growing global demand for oil. But since 2005 real estate prices have become inflated and bubbles have formed. Particularly in commercial real estate demand is weak and prices are unrealistically high. And for residential property the demand is in the low and middle income segment while the supply is in the luxury market’.