Soaring real estate prices shut out Morocco's middle class

Moroccan private company manager Slimane Belhouat has been trying to buy a house for five years. Even with a monthly income of 12,000 dirhams – in a country where the average citizen earns 1,344 MAD each month – he is currently unable to obtain a loan to buy a flat in a decent and quiet area in the capital.

"You now need a budget of at least a million dirhams to buy a home with an area of 80 square metres in Rabat, which I just can't afford. I'm not going to spend three-quarters of my salary for years on end to buy my own flat."

He is not alone. Karima and her husband Othmane wanted to buy a plot of land to build a two-storey house in Temara, but as the years passed, their dream faded away. The young couple now hopes to buy just a flat with enough room for a small family.

"Land prices have skyrocketed. To buy a plot measuring 90 square metres you need at least 900,000 dirhams. That’s beyond our means, even though my wife and I both work as managers for a company. There have been unprecedented rises in prices," says a crestfallen Othmane. His wife Karima notes that the situation has driven many of their friends to buy social housing intended for those on low incomes.

There is another problem preventing many from buying their own homes: so-called "black payments" which buyers are expected to make "off the books" so that developers avoid paying taxes. Even though the practice is illegal, it is widespread. Payments can reach as much as half the price of a flat. The phenomenon has persisted despite numerous promises by the Ministry of Housing to launch a crackdown.

Since banks will only lend up to the amount stated on the official contract, the prevalence of so much money exchanged under the table has forced civil servant Samira Toumani to abandon the dream of having her own home.

"To buy a flat I needed to take out a bank loan and find the rest myself," she tells Magharebia. "In the end I gave up. Renting suits me best for the time being," she says.

The Ministry of Housing acknowledges that there is a severe shortage of housing for the middle class. According to figures from the High Commission for Planning, 2.4 million families are affected. A total of 800,000 families do not own their homes; 300,000 of these families live in inadequate housing.

The situation has arisen because the government, through ambitious programmes such as the FOGARIM housing-assistance fund, has focused its attention on low-income housing over the past few years to reduce the number of shanty towns and sub-standard dwellings. Moreover, government tax breaks granted to property developers have spurred the latter to target the state-subsidised housing sector.

The government wants to cut the housing shortage to 27% by 2012. To achieve this objective, the various market players are now seeking to implement two agreements signed in February to help middle class Moroccans acquire their own homes.

The government pledged to make 3,853 hectares of public land available for 200,000 new housing units. Fourteen hubs and urban zones will be created and 28 housing programmes will be implemented in 32 cities across 11 regions of the country. The cost: nearly 52 billion dirhams.

The government has also vowed to increase the size of the guarantee fund for the middle class. By giving private-sector workers access to this fund, the government is hoping to boost demand for property by middle class buyers. It is expected that those with a net monthly wage of 10,000 dirhams and couples with a combined income of 15,000 dirhams will be able to obtain guarantees worth up to 800,000 dirhams.

"The measure will breathe new life into a sector where the need for housing is acute," says Youssef Ibn Mansour, President of the National Federation of Property Developers.

[File] Housing Minister Ahmed Taoufiq Hejira is pushing for more construction of affordable housing.

The Ministry of Housing and various urban agencies are currently trying to allow suburbs, by way of exception, to be "urbanised" and thus permit integrated housing projects. In March, Housing Minister Ahmed Taoufiq Hejira called on all parties involved to work hard to free up land on the outskirts of cities so that homes could be built as soon as possible for middle-class families, who for years have been excluded from government housing programmes.

The creation of a new generation of housing co-operatives is another priority set by the Ministry of Housing to assist middle-class buyers. Most of these co-operatives have failed to achieve their aims due to inadequate funding, mismanagement or disputes. Last year, just 32% of them were able to secure housing, while the remainder have yet to reach the construction stage.

The Ministry wants these groups to have direct access to land at cost. The aim is to make property affordable in order to stop intermediaries from pushing prices upwards. The Ministry is even thinking of subsidising technical and architectural studies to make things easier for co-operatives.

"Developers are continuing to build homes that do not meet the expectations of the middle classes in terms of quality or price," says economics professor Abderrahmane Yahyaoui. He believes that the government's new housing strategy will encourage property developers to focus on middle-class homebuyers: "This segment has the biggest pool of customers," he explains.

Many middle-class Moroccans are anxiously waiting for the government's new strategy to take effect. Still, given the current economic climate, some potential homebuyers are reluctant to act. Mohammed Maaroufi, a higher-education teacher, says that although banks are currently offering advantageous terms, market prices could fall due to the international economic crisis just starting to hit Morocco.

"I want to buy, but I'm going to wait for prices to readjust," he says. "At the moment, they don't reflect the true values of properties."