Property developers in Jordan have stated that residential apartment prices have dropped between five and 10 percent recently and may be down by 20-30 percent in 2009. Experts say the reason is the slowdown in demand due to market conditions and a decrease in mortgage lending, as well as the huge drop in prices of construction material, which is making properties under construction less expensive.
Up until September 2008, demand for residential apartments was healthy and increasing year-on-year. The Department of Land and Survey reported more than 18,000 apartments were purchased in Jordan between January and September 2008, compared to 14,498 the year before, with more than 13,500 sold in the capital, Amman.
Prices of property in Jordan have skyrocketed since the US-led war in Iraq began in 2003, forcing 750,000 Iraqi refugees to escape to neighboring Jordan. Additionally, higher oil prices also led to higher prices in the real estate sector in general.
Some experts fear a property recession, since many people bought their houses on mortgage, and defaults due to the current financial turmoil might lead to foreclosures. Currently, banks are being very selective in giving mortgages. Additionally, available mortgage financing, which was up to 100 percent of the property price, fell to 70-80 percent of the property price. Applications for mortgages fell greatly as a result.
Market confidence has decreased and investors, as well as end buyers, are adopting the ‘wait and see’ strategy. Even though some experts anticipate a huge fall in the housing sector, it seems that the government has not yet implemented a strategy to mitigate the expected downturn.
