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Low-cost housing urged as solution to soaring prices
Governments in the GCC should flood the property market with low-cost homes and impose price controls to help curb inflation, a senior bank official said on Thursday.
- By Cleofe Maceda, Staff Reporter
- Published: 23:54 March 20, 2008
Dubai: Governments in the GCC should flood the property market with low-cost homes and impose price controls to help curb inflation, a senior bank official said on Thursday.
Doha Bank Group chief executive officer R. Seeth-araman said depegging from the US dollar is not likely to happen, as GCC governments have already started to adapt fiscal or policy measures to arrest soaring prices.
"Depegging is not going to happen. It's not in the cards as I see it now. Governments have [resorted to] low-cost housing construction. That's the solution that most governments are doing. They're also looking at the Rent Control Act. There are policy and fiscal measures taken," Seetharaman told Gulf News.
He said imposing a cap on food prices and housing rents, as well as building more affordable homes, is an effective way to cut inflation. Eventually, he added, housing rates will fall and food prices will be rationalised.
"You can put controls on rent and essential goods, which have already been attempted. It's just a question of time when the right kind of balance is achieved," Seetharaman said.
Outlook
"As far as the property market is concerned, the immediate prospect is to build many low-cost houses for the middle level. When supply outpaces demand, prices will be corrected. I foresee the supply of real estate rising over the next year. By then, housing prices will come down. When it comes to food, rationalisation of prices of some essentials is important," he added.
Inflation has been rising across the Gulf, raising government spending and threatening the competitiveness of the GCC region for migrant workers who seek to maximise their savings.
"Inflation is an integration of the economy into the globalisation mode. There are two main [factors] contributing to this. One is rent. Fuel is another. Then, there is the [dollar's decline], which is the essential resource for migrant labour. That is why migrant labour is now a costly proposition."
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