In its latest economic brief on the monthly statistics of registered real estate contracts issued by the Ministry of Justice (MoJ), excluding sales conducted through agents, National Bank of Kuwait reports that, an apparent modest recovery in recent months, the number of real estate sales dropped sharply in September to 223, its lowest level in nearly nine years. This represents a fall of 40% from August. Much of this fall, however, probably reflects the timing of Ramadan, which lasted through most of September and which is often a weak month for sales. If so, activity could bounce back in October. (Although initial indications from the weekly sales data suggest that any bounce has been fairly modest.)NBK noted that the data are not enough to derail the broader recovery story, they do caution against expectations of a rapid improvement in the real estate sector soon. Sales, which can be volatile around Ramadan, dropped to -19% from +13% in August (y/y growth). Activity levels remain generally low. In KD value terms, total sales also fell by 40% between August and September, reaching KD 58 million. This is the lowest level for nearly eight years. After turning positive in August, the annual growth rate plunged to -54% from +9% last month, again exacerbated by slow Ramadan activity. i) Sales - residentialThe residential segment was the chief cause behind the drop in overall sales in September. The number of residential sales fell by 40% from August, to 169. In value terms, sales dropped by slightly less (34%), implying a rise in the average value of properties sold. Nevertheless, this does not mark a return to a rising price environment; the monthly data are too volatile to be able to draw such conclusion. More likely, it simply reflects sales of properties of slightly higher value during September. Indeed, on a rolling 6-month average basis, residential housing prices are still dropping at a record rate of 8% per year – their fastest drop in nearly nine years. ii) Sales - apartmentsNBK noticed that the number of sales in the investment (i.e. apartment) sector fell by 40% to 54 in September, reaching their lowest level since February 2006. Averages sales prices have bounced back – at KD 394,000 they are up 44% on a year ago. But this is more a reflection of chronic weakness this time last year rather than a sign of strong recovery. (Average sales prices this time last year had already plunged 66% y/y.) Low transactions prices could signal that deals are tending to be struck at the relatively low end of the market, rather than at the higher end where financing might be required.iii) Sales - commercialThere were no transactions of commercial property in September, the first zero month since November 2006. Although this can in part be attributed to the Ramadan effect, it also underscores continued weakness in what has traditionally been a slow segment of the Kuwaiti market. Indeed, sales have taken place during all other Ramadan periods in recent years. Including September, there has been an average of just six transactions of commercial property per month this year, down 44% on the average through 2008. These sales can be ‘lumpy’ of course; in previous years, average transactions values have been in excess of KD 2 million. As such, it is arguably the segment most likely to be hit from reduced access to external financing.Savings and Credit Bank loansThe number of loans approved by the Savings and Credit Bank (SCB) fell by 35% between August and September, to 229. This was its lowest level since January 2006. Again, while no doubt influenced by the timing of Ramadan, SCB loan approvals have been trending lower for most of this year and are now 55% lower than they were in January. Loans for the construction of new homes were hardest hit, falling 47% to just 46. This compares to 364 a year ago. The continued decline is also probably linked to the ebbing of the government’s land plot distribution program from earlier this year. Loan approvals for other types of SCB loans – notably for the purchase of existing homes, plus additions & renovations – were also down in September, but less so. While the short-term outlook for SCB loan approvals remains uncertain, the medium-term outlook may have been boosted by the government’s recent announcement that it plans to develop more than 70,000 new housing units by 2015.