Morocco’s real estate sector, or the second-largest job provider sector in the North African country, is facing a slow down during the current year amid a notable economic downturn, Arab Weekly reports.

In the first half of 2019, the total real estate supply rose by 30%, while the demand fell by 7%, according to a recent report by the Central Bank of Morocco, noting that property transactions fell by 8% in Q2, compared to the year-ago period.

Three major real estate development companies also saw their net profits dropping in H1 2019, namely Residences Dar Saada, Alliances and Addoha, by 17.1%, 8.6%, and 17.4%, respectively. Additionally, since the beginning of the year, these companies lost part of their value by 39%, 31%, and 48%, separately.

Experts attribute this sluggish performance to three factors, the first of which is the registration and conservation fees, which are hindering sales, whilst the second reason is the price reference system, imposed by the finance ministry almost five years ago to fight “black money” in housing transactions.

“There are many property owners who cannot sell or hesitate to sell their properties for fear of being fined by the tax authorities because the selling price is below the reference … The problem with the price reference system is that it is not really connected with the reality of the real estate market, which means that selling prices are lower than the fixed reference pricing,” Jad Aboulachbal, a notary in Casablanca, was quoted as saying by the Arab Weekly.

Meanwhile, market professionals also highlighted that due to the weak demand for high-end units in major cities such as Casablanca and Rabat developers were pushed to lower prices, which also influenced the market’s overall performance in 2019.