I am not an economist, but I tend to believe there is a real estate bubble in Egypt.
This bubble is mainly driven by the fact that buyers pay the down payment, few installments, sell the house at a higher price for someone who will finish the installments, repeat.
When the real estate bubble happened in US in 2008, some people could predict it by looking into the individual loans (mortgages) that people took and compared latency, and default rates to the great depression in 1920s.
The Egyptian situation is more complicated. The devaluation of the Egyptian pound is raising prices anyway.
Yet, I believe the crazy increase in prices isn’t only a result of what’s happening with the Egyptian pound.
The problem is there is no data to back my claim.
There is no data on default rates for real estate loans.
There is no data on occupancy rates of sold units. What’s the ℅ of buyers who actually live in the house?
There is no data on the average length of ownership. How long before a new house owner sells it?
Are there any indicators of sellers who had to lower the price to find a buyer?
This could be a great topic for investigative journalism. Someone who goes after real estate development companies, banks, buyers, sellers, and tries to find what’s going on.
Until this happens or the bubble burst, I will be the bubble boy.
Bonus: this post explains the mechanics of the current bubble (Arabic).