Lebanese housing bubble
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The Lebanese housing bubble refers to an economic bubble affecting almost all of the Lebanese real estate sector, whereby property prices have risen exponentially since 2005 (an average 5-fold increase as of February 2010), while the GDP has risen only around 52% during that same period.[1]
The Lebanese GDP per capita is around US$13,000 (after taxes) while the Lebanese working abroad make on average around $30,000 /year (after taxes). A decent housing situation far away from Beirut can cost around $150,000, a decent housing in the suburbs of Beirut can easily cost 4 times that amount, while decent housing in the Beirut Central District could cost millions. Since home prices are rising constantly, many Lebanese and other investors are buying (through a mortgage) houses in order to resell them later (to other potential investors) at inflated prices. This strategy, as well as other deceptive strategies by the real estate agents left many Lebanese, both inside and outside Lebanon, unable to buy property in Lebanon anymore. Additionally, the inflated home prices are leading to an increase in rental prices, further increasing inflation and decreasing the real income of the Lebanese living in Lebanon. Other Lebanese who are end-buyers (e.g. not thinking of reselling their home) are committing to long term and risky loans in order to repay their mortgage. Since the banks only give 60% of the price of the house,[2]