Sharp decline in residential real estate: 26% in three months

Oriental Eco

Morocco's residential real estate sector is currently in turmoil. Data published by the Bank of Morocco on the Real Estate Asset Price Index reveals that the used real estate market is going through a significant downturn during the second quarter of 2025.

Official figures show a sharp drop of 25.9% in residential real estate transactions compared to the same period of the previous year, reflecting a clear decline in demand for the sector. This overall decline masks divergent developments by different types of real estate. Apartments recorded a 17.1% decline in sales, while houses saw a steeper decline of 26.9%.

In this dismal context, the villa sector stands out as the lone exception with a remarkable 11.4% year-on-year advance in transactions, accompanied by a 1.6% rise in prices. This exceptional performance contrasts with the overall market trend.

Geographic analysis reveals important disparities between the Kingdom's major cities. Rabat stands out as the only capital to show positive growth with an 8.2% increase in sales, an anomaly in a national landscape dominated by stagnation. In contrast, Casablanca fully embodies the sector's difficulties with a decrease of 13.8% in residential transactions, confirming its position as the city most affected by the downturn.

Marrakech is positioned in the middle with a slight decline of 0.5% in sales, indicating relative resilience thanks to its diversified clientele combining local and tourist demand. Tangier faces the harshest impact with a staggering 19.2% collapse in residential transactions.

In the face of this alarming situation, industry professionals offer different explanations. Some experts downplay the decline by attributing it mainly to a circumstantial phenomenon rather than a structural issue. According to this analysis, housing assistance mechanisms focused exclusively on new construction are creating an imbalance at the expense of the older real estate market. This preferential orientation of demand towards new housing mechanically explains the apparent weakness of the used real estate sector.

This transformation theory finds its limits in the absence of standardized official statistics on the new market, which makes it difficult to verify this demand transformation hypothesis. The Bank of Morocco's data actually only covers old real estate, leaving the real development of the new construction sector in the shadows.

Other specialists take a more pessimistic view, arguing that the situation is much more than a shift of customers to the new. According to this approach, the new real estate market is also facing major difficulties, questioning the hypothesis of compensation between the two sectors. Housing assistance, limited to properties worth less than Dh800,000, cannot alone explain the magnitude of the observed phenomenon.

The real challenge lies in the generalized inflation of production costs that is hitting the entire sector. Energy, building materials, labor, and even land have seen significant increases, creating a growing gap between supply and the purchasing power of Moroccan households. This inflationary cycle generates a paradox where supply exceeds demand, but at price levels incompatible with the real purchasing power of potential buyers.

Tax pressure is another aggravating factor identified by specialists. Real estate developers face an accumulation of taxes that are inevitably reflected in the final price of housing, contributing to the gap between supply and paid demand.

Administrative bureaucracy is also a major obstacle to the proper functioning of the sector. Procedural delays turn projects initially planned for one year into three-year workshops, doubling financing costs and heavily burdening the cost of real estate operations.

This complex situation raises questions about the future of the Moroccan real estate sector and calls for deep reflection on the measures to be taken to restore the balance between supply and demand. The question remains open as to whether this crisis is merely a market respite or a harbinger of deeper shifts in the national real estate landscape.