0:00 The Board of Directors of the National Bank of Ethiopia, in its regular meeting held on August 1, 2015, decided to implement immediate policy reforms that would reduce inflation in a sustainable manner. The government's attempt to limit the money supply in the market caused a severe cash shortage. However, what did the government do? Due to the high inflation, it withdrew money from the market and imposed a cap on banks to prevent them from lending, causing a general cash shortage, and some sectors were almost out of business. We can take the real estate sector by storm. Hello, how
0:49 are you, dear Kev Tube viewers? In today's episode, we will be exploring the current state of the real estate market. Your main focus in this survey is that the market situation shows that the prices of apartments sold at the Berlit level have shown a slight decrease since the 20th century. Similarly, following the recent announcement by the National Bank of Ethiopia that the 14 percent lending ceiling imposed on banks in 2018 will be lifted, house prices are now showing signs of a slight increase from the previous decline. We will be
1:36 presenting you with a detailed analysis of these situations. Stay tuned. If you want the most useful tips and experiences for your life, don't miss the channel, it will be useful. Subscribe. In 2015, the government issued a new guideline through the National Bank, which stated that banks can only lend less than 14 percent of their gross annual profit. This prevented the flow of cash into the market, resulting in a severe shortage of silver, which led to a very special price reduction in the market, and the overall inflation
2:25 rate was reduced from 3 percent to 13 percent, according to the Ministry of Finance of Ethiopia, as well as the daily data released by the National Bank. Not only this, but recently, following the announcement in the Reporter newspaper that the 14 percent or 14 percent bank loan limit imposed by the National Bank in 2018 will be completely lifted, and the National Bank has also said that it may lift this situation, real estate prices are currently increasing slightly. I will provide you with information on the role this situation plays in the overall home sales process.
3:13 As you know, dear viewers, as I told you in my introduction, the National Bank of Ethiopia provided information on the country's major financial activities in the month of June, the end of the fiscal year 2015. He made two major decisions to curb inflation at the time of the report and to limit the government's borrowing capacity. It
4:11 is worth remembering that the government has implemented two major policies in the form of guidelines, namely, to limit the amount of loans borrowed from the National Bank to no more than 30 percent, and to ensure that the amount of money that banks release to the market or in the form of loans does not exceed 1400 percent of their total profits. The National Bank of Ethiopia plays a significant role in the various inflation-control efforts listed above. Therefore, the Board of Directors and Management of the National Bank of Ethiopia have prioritized reducing inflation in the current 2016 fiscal year and are working diligently to do so. After conducting an extensive internal review and recognizing the limitations of our efforts to ensure the value of credit growth last year, we have decided to place a limit on credit to both the government and the private sector in this fiscal year. Based on this, we will take the following policy measures to help reduce inflation.
4:57 As an overall goal, the National Bank of Ethiopia is working to reduce inflation to below 20 percent by the end of June 2016 and below 10 percent in 2017. Second, domestic credit growth will be capped at 14 percent by the end of June 2016 fiscal year. Then, starting July 20, when banks began to directly implement the directive, the amount of cash entering the market decreased significantly. For this reason, many real estate companies have been forced to sell their existing homes, reducing their home prices and
5:47 even selling existing homes. Here, the government's Landlord-Tenant Proclamation was also added, and since the house they had been storing in real estate with the intention of selling it at a profit one day was considered a rental and therefore had to be taxed, many of them decided to rent it out and sell it, claiming that they would not pay taxes without income. The government's move in this direction is very strong and good for home buyers, but it has caused significant problems for most home sellers. The government's imposition of a limit on the supply of money has led
6:34 to a severe cash shortage in the market, leading to a shortage of money. The government must match the supply of rice with the demand. It is when there is an equilibrium of demand and supply. It is reasonable. But what the government did was to withdraw money from the market due to the sharp increase in inflation, impose a cap on banks, and prevent them from lending, causing a general shortage of money, and some sectors were almost out of business. We can lift the real estate sector. Housing construction and housing sales have almost hit. This sector was also a major economic driver.
7:19 How do you say that? What do you think is the best answer? Most homebuyers either borrow money from a bank or borrow money from a business they run. It's obvious, isn't it? All of these things mean that when banks stop lending, the total amount of money in hand disappears. This has been the problem in the Ethiopian housing market for the past two years. Since most people were buying and selling domestically, the overall real estate market or real estate market activity experienced a severe financial crisis as banks stopped lending or limited the amount of loans they could provide.
8:08 This severe financial crisis was also experienced by real estate developers and real estate home buyers. Because of this, a problem arose. What? Too many home sellers came on the market, too few home buyers came on the market. This mismatch between buyers and sellers, or demand and supply, has led to a significant artificial price decline. What do you think, I'm being too artificial to explain this? If money had been properly injected into the market and a housing supply had been created to meet the housing demand, life would have experienced a normal price decline.
8:58 However, studies indicate that there is an additional demand of 438,000 homes per year. This reporter has left this issue. Based on this, what has the Ethiopian real estate sector achieved, where four hundred and thirty-eight thousand houses are not built every year? The only reason the price has decreased is because it has been lost and lost in the market. For this reason, the past two years, from July 20, until now, house prices have not shown much change, that is, without growth, and the
9:48 market has been stagnant, as sales have been low. This has caused real estate companies to face serious financial difficulties. However, while most real estate companies are trying to sell, the macroeconomic situation has improved and the difference between the birr and the dollar has widened significantly. This has been another additional problem. Dear viewers, the information that has recently been released appears to refute this. It has been reported that the lending capacity of some banks will be lifted starting from September 2018, the Ethiopian calendar. As
10:48 usual, I will provide you with information on what this means and what consequences it will have for the home buyer and the homeowner. First-time home buyers are advised to complete their purchase as soon as possible, between now and September. Home sellers are also advised not to leave their homes now unless it is necessary, urgent, or urgent. why? Let me tell you about what is currently being talked about and done, namely that banks will use the full percentage of their lending capacity. You would be very surprised if I told you about the chaos and chaos that is especially prevalent in the area of condominiums. Bank employees in the condominium area
11:33 are looking for houses in Amharic only, hoping to buy them before they are approved, and they are buying them early. The way they are doing this is by pre-owning houses with loans and also with collateral, that is, with collateral. They got it, didn't they? Therefore, if banks are allowed to lend directly, they will start lending money to their employees and customers in droves. That means that overall cash activity in the Ethiopian market will increase significantly. It is also expected to reactivate the market and increase the value of fixed assets from their current
12:18 levels. So, if this opportunity arises, home buyers will have the opportunity to sell their homes after September at a better price than they currently have. Therefore, it is recommended that you do not rush to sell your house right now unless you are facing an emergency. The second thing is home buyers. There's never been a better time for home buyers. With that said, many of you will say that it's a scam, but you are seeing what happened to someone who didn't listen to me. Two years ago, when the National Bank released this same information, you provided the same analysis. What
13:06 house sellers, if you have a house to sell, I told you to sell it quickly, and the broker said that you were trying to improve it, but it wasn't. Now, almost everyone has entered the market as a seller, but there are very few buyers. Now, sellers are begging, and buyers are begging. This situation can cause the price to go down. I have said this many times, "Sell it quickly," but no one has listened. I don't know if there are those who have listened, but they haven't listened. You can see in their text here in the comments that they were not listening. This is what I keep saying again. This video will be a judgment, just like the previous video. You can watch it by clicking on it. I have put it in the description. I have put the link to the
13:54 video I posted two years ago in 2015, as a testimony, in the comments below this video. You will be very surprised. Do you think he said that? To be honest, I'm not an economist. But to understand the Ethiopian market, especially in real estate, it is clear that it follows very simple economics. Because if too much money is spent or invested in a market, someone may be forced to pay what is demanded. Also, the real estate agent may have the opportunity to ask for a higher price. That was the situation I was talking about, and now the same thing is happening. The National Bank of Ethiopia had announced in
14:41 September 2018 that it would now lift the lending ceiling or 14 percent of commercial banks' profits, which it had imposed on them. Surprisingly, no price adjustments were made to real estate properties after this announcement. The proof of this was the house I left you last month. A two-bedroom house in the city center that was being sold for 16 million birr is now being sold for 1.8 million birr. Similarly, the three-bedroom house, which was selling for 17.3 million birr, is
15:26 now being sold for 18.9 million birr. This is not telling us something simple . Recently, houses that were only being sold in Ethiopian Birr at very low prices are now showing signs that they are also being imported back into the US dollar. Especially in central Addis Ababa, in developing neighborhoods like Addis, the prices of houses being built and houses being built are being quoted at this level. So what do you say? The trend we are seeing is an increase in house prices. So home buyers, now is the time to buy. If you're thinking of buying or renovating your home,
16:15 now is the time. Because even if it's not the time to sell now, if you're selling to change, this is your option. Especially, be careful, those of you who are planning to buy two or three houses in the city center or the suburbs and rent them out to your family, but before you eat, decide quickly. This is my message to you, my dear brother. If you accept it, accept it. If you don't accept it, it's your business. At least consult other economic experts again. Take this as a starting point and see if it is true that it is being said that this is how it will happen. If it is true that it will happen like this, consult them and see if it will happen like this.
17:00 They will give you the correct information. It's obvious, isn't it? So please, viewers, use the information provided here. In general, there are two messages in this information. One is that the government has announced that the time limit or lending limit imposed on banks may be lifted in September 2018. And he does. So if this happens, the economic impact will not be easy, as it will have its own consequences for home buyers and sellers. Obviously, the second thing is that
17:47 there are people who think that they can sell at a profit because the price of the house may increase in the future, and they have to hold on for a while because their profit maximization is still further ahead. By this, I mean to recommend a natural approach, not to create an artificial shortage in the market. I have provided you with this information. This information is not intended to benefit or harm any party. It is just information for buyers and sellers to help them make a decision. I humbly request you, those of you who are in the position of home buyers and home sellers, to help me in this way . I'm done. Thank you very much for watching.
18:36 I will bring you other topics in the next video. But let's stop here for today. May God bless our country, which has made us feel good.
