A year after the trough, the recovery in Dubai’s property market continues as prices rose just under 1% in October to settle at AED 977 per square foot, according to the UAE-based property portal, Property Monitor.
After recording a massive 2.51% gain in June, monthly price growth continues to slow slowly and for the first time in eleven months has seen more sustainable monthly growth of less than 1%, he said. .
Although the monthly growth rate is slowing, the annual trend has continued to increase, after the market bottomed out in November 2020.
With house prices up 19.9% ââyear on year and the current price recovery continuing to mirror that of the previous cycle, where first 12 month prices rose 19.7% year on year. October 2012 to September 2013, we still see continued growth in the months to come.
According to the report, the recovery was fueled by strong performance in the villas and townhouses segments, particularly in traditionally sought after locations.
However, as stocks dried up amid the seemingly insatiable appetite for this segment, a growing gap between the expectations of buyers and sellers emerged, he said.
“Aggressive pricing by sellers and their brokers, after months of successful sales, has led to overvalued properties that remain in the market as buyers seek value and explore other options, rather than satisfy demands. exaggerated demands from owners, “noted Zhann Jochinke, Chief Operating Officer of the Real Estate Controller.
“This leads us to confirm our expectations regarding the shift in focus to apartment sales where volumes have been more moderate, price growth slower and affordability more attractive to investors and new foreign buyers.” , he noted.
âThis trend is likely to be supported by the impact of Expo 2020, bringing new buyers to the market drawn by the prices and the simplicity of apartment ownership,â he added.
Trades in October were 5,224, down a further 7.9% on a monthly basis after falling 2.2% in September. However, this is still the strongest performance for October since 2015. Despite these encouraging figures, it is unusual for there to be a slowdown in transactions in October.
âWe would normally expect activity to follow the historic seasonal pattern of monthly growth from September to November. This, together with the slowing pace of price appreciation, are early indicators that the market is slowing down. more sustainable “, says Jochinke.
Year-to-date transaction volumes now stand at 48,629, exceeding 2020 year-end figures by more than 35% and up over 16.5% from 2019.
âEven in the face of this unusual slowdown in sales, two months into the remaining year, we are on track to reach a total of 58,000 sales transactions and the record numbers that were last seen in the last few years. boom years of 2013 and 2014, âJochinke revealed. .
According to him, a total of 2,078 off-plan transactions were recorded in October, down 17.8% over one month but up 63.9% on an annual basis.
VEFAs claimed a 39.8% market share against 60.2% for completed properties, halting the trend since January to reduce the gap between the two.
This should be brief with the trend expected to pick up as existing unsold stock with developers is absorbed and new projects are launched, he said.
Regarding the outlook for the future, Jochinke said: âLooking ahead, as the Dubai property market begins to show signs of slowing down, it is likely that growth will continue although at a higher rate of appreciation. slow and durable. “
“Headwinds and downside risks increase as affordability of properties in the villa and townhouse segments peaks locally and inflation continues to rise in the United States and Europe,” he said. -he declares.
Jochinke warned that this could increase the prospect of a tightening of credit policy and make the possibility of an interest rate hike even more likely.
“A rise in interest rates would likely be a barrier to buying for many end buyers and therefore have an immediate moderating effect on the real estate market, despite the prevalence of cash,” he said.
“However, Dubai’s relative affordability compared to other major global cities and the likely
influx of new buyers could help the Dubai market outperform even in a less accommodating credit environment, âhe added.
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