The Unassuming Economist

“Prices have shown some signs of softening (…) As of July 2015, prices across the residential and investment property segments have seen average prices fall in year-on-year terms by 6 and 7 percent, respectively (…). As residential prices began to fall in the first half of 2014, average investment property prices began increasing, rising by some 71 percent between March and September. After peaking in September 2014, average investment property prices have fallen by approximately 32 percent as of July 2015. Residential prices bottomed out in October and subsequently recovered by about 44 percent during the same period. These trends, however, do not offer strong evidence of a housing price downturn”, notes the latest IMF report on Kuwait.

On the policy front, the report says that “Macroprudential tools can help mitigate potential risks posed by banks’ high exposures to the real estate sector. It is important to ensure that macroprudential policies are reviewed constantly to ensure that they do not exacerbate any property price correction, while preempting the buildup of excessive risks related to real estate exposures. (…) House price growth is a core indicator to monitor and the authorities should construct indices for residential properties as well as commercial properties. Also, other indicators, such as both the average and distribution of the LTV and DSTI (DSC) ratio, should be collected and analyzed to adjust macroprudential policy measures properly and swiftly.”