According to a recent Reuters poll of Property prices in Dubai, prices will rise this year and next at a slower pace than previously thought as higher mortgage rates and the cost of living crisis will reduce foreign demand.

Dubai’s property market recovered strongly from 2020’s severe downturn, with an economic rebound propelled by higher energy prices. Buyers snapped up luxury units after the emirate eased pandemic restrictions much faster than most cities around the world.

Home price rises were forecast to slow to 6.5% in 2022 and 3.0% in 2023 respectively, according to the median forecast of 10 property analysts polled on Aug. 15-Sep. 2, 2022.

This outlook is far more promising than other world property markets including Canada, Australia and New Zealand, where house prices were expected to fall this year and next. 

“Demand for residential properties has reached an all-time high this year, but this trend could change due to the rising cost of living, increasing mortgage rates, and anticipated new supply,” said Haider Tuaima, director and head of real estate research at ValuStrat.

An oversupply of homes from previous years has come to the rescue of Dubai’s property market by keeping affordability in check. Many other major property markets around the world are struggling with runaway house price inflation.

When asked to describe the level of Dubai house prices on a scale of 1 to 10, from extremely cheap to extremely expensive, the median response was 6.

“Given that Dubai continues to be a buyers’ market, developers will refrain from increasing prices substantially. Therefore, affordability may continue for some years,” Anuj Puri, chairman at ANAROCK Property Consultants, said.

“In fact, given that there was an oversupply in many of the areas, the market failed to push for higher prices in recent times. Prevailing lower prices have made the Dubai market attractive for both foreign and local investors as well.” The Central Bank of the United Arab Emirates has increased the interest rate by a cumulative 225 basis points since March in line with the U.S. Federal Reserve, since the UAE dirham is pegged to the dollar.

Source: Reuters