Rising interest rates and growing debt shake up Morocco’s housing market

Tightening monetary policy, such as raising interest rates, has forced Moroccan borrowers to cut their debt and pull back on housing demand, According to a study titled “Housing Prices and the Effectiveness of Monetary Policy in Morocco Using a DSGE Model.” 

As a result of this monetary policy, housing prices in Morocco have dropped noticeably.

The study says that when people borrow too much for homes, it can take longer for the economy to recover, and it may lead to periods when house prices rise quickly and unsustainably.

Researchers warn that using only interest rates to control housing prices doesn’t work, since past data shows that interest rates only explain a small part of the changes in prices.

The study warns that a fast-growing mortgage market can be dangerous. When many people borrow at once, it slows down the economy’s recovery and makes housing bubbles more likely because too much credit is available. This shows that stricter lending rules are needed.

The report comes at a time when Morocco’s housing market is undergoing rapid change. 

Government programs, increased housing construction, and a rapid rise in mortgage loans are shifting the market. 

In fact, between 2012 and 2021, mortgage loans increased by 32 percent, reaching MAD 232.82 billion in 2021, with housing loans making up 80 percent of that total.

Researchers say that real estate remains a key part of Morocco’s economy because it drives investment, creates jobs, and affects how people spend their money. 

Researchers also point out that more people moving to cities and increased migration are adding pressure to the country’s housing shortage. 

As of 2024, Casablanca had the highest average real estate prices in Morocco. Villas were priced at approximately MAD 16,457 per square meter, while apartments averaged MAD 12,503 per square meter. 

Rabat followed closely as the second most expensive real estate hub for both villas and apartments.