Soaring Home Prices Spelling Long Engagements in Algeria | Cross River Real Estate
When Salim Medhi returned to his native Algeria after a five-year stint in Canada, he didn’t think he’d still be living with his parents eight years later.
The 36-year-old accountant brings home 170,000 dinars ($2,000) a month, about four times the average household income in the North African country, and more in line with wages in Greece and Portugal. Yet with real estate prices rising by more than six-fold in the capital Algiers in 10 years to an average of 200,000 dinars per square meter, and no access to a mortgage, he can’t afford to buy his own home.
“It’s crazy what is happening in Algeria,” said Mehdi, recounting his efforts to purchase his first home and marry his fiancée of four years. “With the current prices per square meter, I could buy a house with a garden in Montreal.”
The shortage of affordable housing has sparked tension in a country ravaged by civil war throughout the 1990s, though Algeria so far has avoided the sort of unrest that spread across the Arab world over the past three years. While the government of President Abdelaziz Bouteflika increased housing subsidies and brought in foreign companies to speed up building projects, there have been sporadic riots across the country, including one in the coastal town of Jijel last week.
Higher earners like Mehdi are caught between two areas of the market. They aren’t part of the group of wealthy Algerians investing in property to shield savings from inflation, reducing an already limited supply of properties. Nor are they among the most needy the state is offering aid to.
“The government is aware that this is one of the triggers, potentially, of a revolt,” saidRiccardo Fabiani, a North Africa analyst at Eurasia Group. “Memories of the civil war is still probably the biggest factor in containing social rage, but the question is how long does this last?”
http://www.bloomberg.com/news/2013-12-02/soaring-home-prices-spelling-long-engagements-in-algeria.html
“It’s crazy what is happening in Algeria,” said Mehdi, recounting his efforts to purchase his first home and marry his fiancée of four years. “With the current prices per square meter, I could buy a house with a garden in Montreal.”
The shortage of affordable housing has sparked tension in a country ravaged by civil war throughout the 1990s, though Algeria so far has avoided the sort of unrest that spread across the Arab world over the past three years. While the government of President Abdelaziz Bouteflika increased housing subsidies and brought in foreign companies to speed up building projects, there have been sporadic riots across the country, including one in the coastal town of Jijel last week.
Higher earners like Mehdi are caught between two areas of the market. They aren’t part of the group of wealthy Algerians investing in property to shield savings from inflation, reducing an already limited supply of properties. Nor are they among the most needy the state is offering aid to.
Rampant Inflation
Home loans are hard to come by in Algeria’s underdeveloped mortgage market, where sellers prefer cash. What’s more, the inflation rate rose to a 15-year-high of about 9 percent last year before falling to about 4.8 percent this year.“The government is aware that this is one of the triggers, potentially, of a revolt,” saidRiccardo Fabiani, a North Africa analyst at Eurasia Group. “Memories of the civil war is still probably the biggest factor in containing social rage, but the question is how long does this last?”
http://www.bloomberg.com/news/2013-12-02/soaring-home-prices-spelling-long-engagements-in-algeria.html
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