By Andy Sambidge
Annual price increases slump from 11.7% in Q1 to 6.3% three months later as mortgage cap, transfer fees hike kick in
Annual growth in prime property prices in Dubai almost halved in the second quarter of 2014 compared to the previous quarter, Knight Frank said on Wednesday.
Prime prices rose by 6.3 percent in the year to June, down from 11.7 percent in the last quarter, its Prime Global Cities Index for Q2 revealed.
Dubai was ranked the 13th best performing real estate market tracked by the property consultancy, a sharp fall from previous quarters when the emirate has featured in the top two positions.
Knight Frank said moves to introduce a mortgage cap and double transfer fees at the end of 2013 has "influenced buyer activity more than forecast".
New research by Knight Frank also revealed that 25-35 percent of purchases in Dubai are mortgage financed, more than previously thought.
However, with new supply at the prime level looking limited over the next 18 months Knight Frank added that it expects prices in Dubai to strengthen in the remainder of 2014.
Globally, prime residential prices across the index’s 32 cities rose by 6.2 percent on average in the year to June 2014.
Of the 32 prime residential markets tracked by the index, 27 recorded positive annual price growth in the year to June 2014, up from 21 a year earlier.
Jakarta and Dublin stood out due to their stellar performances, ending the year to June 27.3 percent and 23.5 percent higher respectively. However, in both cases the rate of growth has slowed in the second quarter.
US cities also marched up the global list of prime property price growth with New York, Los Angeles, Miami and San Francisco all in the top 10.
This is total nonsense. KF should not be allowed to issue reports like this one. The market is not bullish. I invite KF to:
- Have a look on the nber of flats and villas available for sales on the market. The nber is increasing on weekly basis. Have a look at Dubizzle if you are curious somehow.
- Drive through Dubai on night and see how many apartments/villas are lighted. This might light your mind!
Stop misleading people. Your excuses, as putting everything on mortgage and fees, look extremely pathetic. You need to show more creativity but we are not blind.
Any report that you issue is just harming the industry as we (sellers and buyers) are smart enough to see that the market is seriously bearing and not only for a few months.
Totally agree, but you have to remember that KF and other property related companies are at a point of crisis management. If the market doesn't pick up again soon they will have to start trimming the number of consultants they employ. Oops!
The funny thing is that it seems the only people who learnt anything from the last crash are the potential buyers. This time they aren't taking the money being dished out much too readily by the banks.
How long will it take before we see actual signs of panic?
@Roxan Please read the article: KF mentions PRIME property, not all property that is listed on Dubizzle. Prime property has only a selected target market. The new supply launched on a weekly basis means that more developers are fighting to get investor's money which in turns gives more power to the investor.
Real estate brokers and developers have confirmed that Q2 has been very quiet in terms of sales and surely I would not believe those developers mentioning they sold out in 12 hours.
With Cityscape coming up in September I expect many more announcements of new developments which in real life are not affordable for residents that are on less then 35,000 AED monthly salary or without plenty of savings, which makes up the majority of residents in Dubai.
Anna, as a matter of fact a majority of residents are under 3,500 dhms per month. You got it wrong by one zero
But yes, your point about affordability is a valid one. It is one of the key points we have been making for a long time, the other being contract enforcement, property laws and the mismatch between advertised and actual quality.
Good to see nothing has changed since last bubble.