As for the obstacles impeding property registration, Samy cited construction as well as zoning violations. “Building on arable land is illegal and such properties can never be registered. Unlicensed buildings cannot be registered either. Only registered properties have access to mortgage funding, according to regulations,” he explained.

“Although mortgage funding is a key instrument for homebuyers, [there are] registration problems. Since a mortgage is an asset-based lending scheme, it is imperative to facilitate the registration of properties in Egypt to enable individuals to have access to the central bank’s mortgage initiative,” Samy said.

The Central Bank introduced a mortgage finance initiative worth 10 billion pounds ($595 million) in February 2014 at an 8% interest rate for middle-income citizens. In 2015, the bank raised the initiative to 20 billion pounds ($1.19 billion). The loans are repaid at a reducing balance rate, with interest charged on the shrinking principal that reduces with repayment of each loan installment.

“This is a continuation of a previous initiative to provide those who cannot afford a mortgage to buy housing ,” Samy said, referring to the Central Bank’s 2014 mortgage initiative.

In what analysts described as a “kiss of life” for Egypt’s property market, the Central Bank of Egypt unveiled a 50-billion-pound ($2.97 billion) mortgage initiative on May 30. It is designed to enable Egypt's middle class to buy property, Sherif Samy, former chairman of the Financial Regulatory Authority , told Al-Monitor.

It's also difficult for Egyptian individuals to certify their incomes, Samy pointed out. Most Egyptians have more than one job. For instance, an individual may work as a public servant in the morning and as a taxi driver in the evening. While he can provide a salary statement for his official position, he cannot give income certification for the driving. Many Egyptians face this problem.

“A proven income is a must in all cases. This is a challenge facing most mortgage firms. How could a mortgage firm approve an application if the customer cannot provide an income statement, revealing the exact monthly salary? On average, the [monthly] loan payment cannot exceed 35%-40% of the monthly income of a mortgage applicant,” Samy explained. “In case of a default, the property developer pays the mortgage firm and seizes the property from the customer.”

The initiative comes in response to calls made property developers, who are seeking measures to grow the market for Egypt’s growing supply of housing.

“It will definitely help the middle class get housing with affordable payment mechanisms. This will stimulate demand for properties, which have suffered from a slowdown following the currency float in 2016,” Khaled Mahmoud, head of marketing at New Cairo Real Estate Company, told Al-Monitor.

Mahmoud said, “The 2014 mortgage initiative ended in early 2019. The property market needs for credit granted to middle class customers who seek apartments worth up to 800,000 pounds [$47,600]. … We may say it is a kiss of life, as it will help the developers as well as the middle class.”

Mahmoud said most developers offer new units in new urban communities, adding, “The government should standardize real estate registration across the country,” he said.

In April, Egyptian lawmakers called for speeding up a real estate record bill to register properties. Parliament member Alaa Wali, the head of the parliament’s housing committee, was quoted by El-Watan News on April 5 as saying more than 90% of properties in Egypt are not registered.

The bill was submitted to the parliament’s legislative and constitutional committee in November 2018 and hasn’t been enacted yet.

Mahmoud urged banks and mortgage firms to speed up the banking, administrative and legal procedures. “For the developers and customers, time is of the essence, as property prices are on the rise. The interest rate on a mortgage should range between 8% and 12%, which is less than the 19% rate offered by banks for personal loans,” he said.

“The government should allocate more plots of land for real estate development, especially in Greater Cairo, which comprises the Cairo, Giza and Qalyubia governorates,” Mahmoud said.

The 2014 mortgage initiative has been a boon for a category of customers like schoolteacher Mohamed Fayez, who couldn’t afford to buy property otherwise. “My application was approved in 2015. The loan should be repaid by 2025 at 8% reducing balance interest rate. The application processing took around three months,” Fayez told Al-Monitor.

“My apartment was valued at 500,000 pounds [$29,700] in 2015. I have been repaying 2,000 pounds [about $120] per month for the past four years. Without the mortgage, I couldn’t buy my flat. Now my apartment in El-Shorouk City, northeast of Cairo, is worth more than 850,000 pounds [$50,600], but I can’t resell it until all installments are repaid,” he added.