Demand for residential real estate in Lebanon decelerated in the fourth quarter of 2017, as reflected by the results of the Byblos Bank Real Estate Demand Index. The index posted a monthly average of 44.9 points in the fourth quarter of 2017, constituting a decrease of 9.3% from 49.6 points in the third quarter of the year and a decline of 3.3% from 46.5 points in the fourth quarter of 2016. 

Demand for housing in Lebanon is primarily correlated to political stability, consumer confidence and economic activity. However, the resolution of the political crisis that was triggered by the resignation of Prime Minister Saad Hariri in early November could not offset the impact on housing demand of the Lebanese Parliament's ratification in October 2017 of a series of tax increases on consumption, income and profits. In fact, the negative impact of the tax hikes on sentiment has weighed on the willingness of prospective buyers to acquire a residential unit, given that buying a house constitutes one of the most important investment decisions for the Lebanese, and the value of a house is usually the single most important non-financial asset for Lebanese residents. Also, the increase in taxes and fees could negatively affect their disposable income and purchasing power, and could weigh on their already-stretched budgets and increase real estate transaction costs, which, in turn, would hold back demand and delay the recovery in real estate activity. 

In parallel, the full year results show that the Byblos Bank Real Estate Demand Index averaged 47.6 in 2017, constituting an increase of 13.7% from a low base of 41.9 in 2016. But the index's average monthly score for the year was 56.7% below the annual peak of 109.8 points posted in 2010, and remained 22% lower than the index's monthly trend average score of 61 points since the index's inception in July 2007. The index declined in three out of four quarters during the year.