Morocco to stabilise soaring property prices

05/06/2008

A steep rise in housing prices has Moroccans worried they will be unable to afford a home. The government announced efforts to address the problem, but citizens question the adequacy of the proposals and whether they will ever be implemented.

By Hassan Benmehdi for Magharebia in Casablanca – 05/06/08

[Hassan Benmehdi] New plans announced by the Moroccan government aim to slow the rise in property prices.

As property prices in Morocco skyrocket, Moroccans seeking to buy homes are becoming increasingly dismayed. New government plans announced by Finance Minister Salaheddine Mezouar on May 27th, however, aim to combat housing speculation and slow the rise in price per square metre.

The twelve measures are designed to tackle an enormous rise in housing and land prices. The housing ministry reports that between 2003 and 2007, prices per square metre rose by 92% in Marrakesh, 45% in Rabat, 43% in Casablanca and 35% in Tangiers. Prices for plots of land have increased even more, by as much as 358% in Agadir and 234% in Rabat.

Abderrahmane Chorfi, General Director of Town Planning at the Housing Ministry, told Magharebia that the spike in pricing is due to speculation in the prices of raw building materials and the increased availability of bank credit.

"Banks are operating in a very flexible way to provide credit for the purchase of housing. Proof of this can be found in the development of mortgage lending, which has risen from 35.2 billion dirhams in 2002 to more than 100 billion dirhams in 2007," he said.

The government measures to slow the rising prices include a package of tax incentives. One of the tax measures is designed to address the scarcity of building land by taxing vacant lots. "This measure should be able to put a stop to speculation on building land,” said Mezouar. Other measures call for the introduction of a tax on the country's estimated 800,000 vacant homes and more public-private partnerships aimed at regulating the market and meeting demand for affordable housing.

Professionals in the sector welcome the proposals, but are quick to point out that implementing them will be a major challenge.

"These are goodwill measures," said Youssef Benmansour, vice-chairman of the National Federation of Property Developers, "but we don’t know how the State intends to apply them, because the law of the market is often pigheaded."

The public also has questions about the role the government can play.

Saïd B’lal, a cloth trader in Hay Mohammedi, told Magharebia, "To be perfectly honest with you, I don’t know how the government can stop the haemorrhage of rising property prices these days. For a number of years, the sector has only followed one law: the law of the market."

Casablanca resident Hicham and his fiancée Malika, who have been looking for their own flat for months, told Magharebia that the decision to tackle real estate pricing came none too soon. "Many young Moroccan couples cannot manage to buy a flat these days, with prices around 8,000 or 7,000 dirhams per square metre... Prices have reached an intolerable level, and it will take many more years for these measures to put an end to the property price anarchy."