Real Estate Prices Increase due to EGP Devaluation and Soaring Steel & Commodity Prices

April 6, 2022 by Nazli Kassem

On the 20th of March, 2022, the Egyptian pound was devalued against the dollar by almost 18%. This drove prices of important commodities up, causing an instant panic in the real estate market. Real estate developers increased their primary units' prices by up to 10%, and further price increases are expected throughout the year.

Here are our key insights in regards to the devaluation, how real estate prices will change, and what the best real estate decisions in today's economy would be:

1. How will the inflation affect real estate? Depending on whether the home is semi or fully-finished, a 15-30% price increase is expected to occur gradually over the coming 12-18 months.

2. Is it better to buy primary or resale in today's economy? This depends on your budget. We think that with a budget of less than EGP2M, you should consider buying primary if your savings will cover 12-18 months of instalments. With a budget of more than EGP2M, you should consider buying a fully-finished resale unit.

3. Should I sell my house and put my money in a certificate of deposit, or hold onto my assets? If your house is semi-finished, we believe you should either sell and downgrade to a fully-finished unit, or sell and put that money in a certificate of deposit for a year.

If your house is fully-finished, we believe that fully-finished home prices will go up by at least 30% in the coming year, so if you own a fully-finished home it may be better to hold on to it.

At Sakneen, our pricing algorithm takes into account key economic indicators such as FX rates and important commodities' prices (e.g. steel, finishing materials for fully-finished homes) that drive the real estate market upwards. With this in mind, all home valuations on now reflect these changes.

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