Morocco’s real estate index decreased by 0.7% in the final quarter of 2022 compared to the previous quarter, a report from Morocco’s central bank Bank Al-Maghrib (BAM) shows. The fall in the real estate index is primarily the cause of a 1.3% price drop in housing assets and a 1.7% decrease in the price of commercial real estate, according to the BAM report.
On an annual basis, the number of real estate transactions plunged 16% for commercial real estate at the end of 2022. Some cities were more affected than others. Real estate transactions shrunk by 18%, 15%, and 7% for Kintera, Fez, and El Jadida respectively, Meanwhile, prices stagnated, or fell for all other major Moroccan cities.
The fall in real estate transactions reflects dropping demand amid a challenging macroeconomic backdrop. The annual inflation rate in the country accelerated to a new record high of 8.9% in January 2023, up from 8.3% in the previous month. On a monthly basis, consumer prices inched up by 0.5% in January, after increasing by 0.1% in the prior month.
In early 2022, the central bank avoided raising central bank interest rates to curb inflation citing the condition of the real estate market which has been taking a downward trajectory since 2017. However, as inflation persisted, the bank increased interest rates twice, from 1.5% to 2% and then to 2.5%.
The real estate price indices (REPI) were jointly constructed by Bank Al-Maghrib and the Land Registry Office on the basis of the latter’s data. These quarterly indices, which have a base value of 100 in 2006, are calculated following the repeat-sales method that controls the heterogeneity of properties. This method does indeed take into account only the properties sold at least twice during the period under review.
