Bursting the bubble?

With house prices in Dubai rising by nineteen percent last year, many have been fearing the return of a property bubble. The central bank’s move to put a cap on mortgages aims to change all that, but is the announcement too much, too soon?


UAE's new expat mortgage law: the facts so far

A central bank circular issued on December 30 capped mortgages for expatriates to 50 percent of the value of the property for the first home and to 40 percent for the second. The amount UAE nationals can borrow was also restricted to 70 percent and 60 percent.

Wednesday, 9 Jan 2013 9:53 AM
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Posted by: Martin Legeur

the mortgage cap has no effect on any buble in dubai. a buble comes from flipping and anyone who takes mortgage cannot flip, it is who put 10 or 20 % directly with a developer on an off-plan project and then resells at a higher price. lets face reality and common sense, why would someone and buy property in dubai if they cant afford at least 50% and according to studies in the GCC a minority of expats can hold jobs for more than 10 yrs while any mortgage will go to 25 years!!! do the risk and the math.

Posted by: Akbar Kazmi

Good for banks, but Bad for bankers. Any new major developments by developers for residentail or office space will likely be held back as their ability to sell to end buyers will be limited in light of latter's ability to generate 50% cash from own savings. Resultantly, banks will be risk averse to finance projects by developers. Therefore, less new property coming into the market, which is good and will support prices of existing completed property over the long term. This cap also protects banks from loss in case the market prices fall as the "cushion" of protection at 50% is substantial. Bad for bankers in the short term as this will most definitely affect their profit outlook for 2013 and beyond, and to pretect that profit, the banks will shed their retail/mortgage lending staff. Since lending to developers will also reduce, overall staff strength will be re-examined

Posted by: Hisham

The rules are still unclear as to whether this only applies to expats. I have been told a similar thing will apply to nationals as well. Anyone know anything about that? This is a good move by the way, don't buy what you cannot afford, instead, try to find something in your price range. Because at 20% you can always walk away from your "dream home", that's how most expats seem to live here, with that eternal emergency exit door open. And yeah, yeah, yeah, your stay is not permanent, have heard all that before. It still does not mean you can live it up and split once you can't afford your dues.

Posted by: ronnie k

yes. there is a lower cap on Emiratis as well.

Posted by: ronnie k

Any rule or law that curbs excessive speculation is good for everybody.

most small to medium investors and end users will be glad that the speculation fueling sharks will have to think twice before flipping a property.

What is the real reason for the recent rise in price of apartments? It may be that the confidence has returned or it may just be that the combination of rich cash speculative investors and their buddies in the real estate agencies are fueling this..?

Posted by: GK PAI

It is unfair without giving proper notice to change mortgage laws.I am sure authorities here will take the right decision to support all the people concerned.
However this change will not affect the pricing nor will have a bubble effect. The economy is going steady. Rich people around the countries outside UAE is finding it safe to invest in properties in UAE esp Dubai and the prices will go up by another 10-15% in the short term and then will hold. Rents will go up. However not like the previous boom, but in realistic terms.

Posted by: mama


which real estate are you working for? cause i was thinking of buying an apartment for my self and I believe you really can give me fact full ideas ?!!!!!

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