Kuwaiti real estate sales fell about 35% in April, official data showed on Wednesday, the first decline in months after the government restricted residential property trading in a bid to curb record inflation.
Inflation in the Gulf Arab state jumped to record of 9.5% in January, driven mainly by a 16.1% rise in housing costs.
The value of all real estate deals – including residential, investment and commercial property but excluding storage – was around 206.03 million dinars ($772.7 million) in April compared to 316.75 million dinars a year ago, government data obtained by newswire Reuters showed.
Global Investment House analyst Walid Samer said the fall might help the central bank to dampen inflation though the coast of food imports was also a big factor in prices.
Kuwait dropped a dollar peg in May 2007 and adopted a currency basket to reduce the cost of non-dollar imports. It pays for a third of its imports in euros.
“Inflation will not fall but might stagnate,” Samer said.
He said a new law restricting trading in residential property was the main reason for the drop in sales after real estate sales jumed 15% in March.
Tougher lending rules by the central bank were also a factor, he added.
Residential sales, the biggest part of the real estate business, fell to 94.31 million dinars in April compared to 185.47 million dinars in the same month last year.
Commercial property sales rose almost 90% to 29.59 million dinars, while investment property sales fell 29% to 82.12 million dinars.
The total number of deals fell to 551 in April from 1,140 a year earlier, the data showed.
The central bank increased the risk on residential loans to 100% from 75% earlier this week, according to new rules reported in the local press.
The central bank’s governor urged the government this month to tackle high inflation by giving away more land to citizens. More than 90% of land is owned by the government. (Reuters)
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