By Staff writer
New Cluttons report says house price declines are expected to persist for another year as supply increases
House prices in Dubai are likely to continue to decline for another year with the market bottoming out at the end of 2016, Cluttons said on Wednesday.
According to its Dubai 2015/16 Winter Residential Property Market Outlook, values for both apartments (-0.8 percent) and villas (-0.5 percent) dipped marginally during the third quarter of 2015, the fifth consecutive quarter of price falls.
Cluttons said house price declines in the region of 3-5 percent are expected over the next 12 months, impacted by faltering global growth and supply levels creeping upwards.
But at the same time infrastructure investments planned around the looming Expo 2020 will boost the rate of job creation and the rate of new households created, the real estate consultancy said.
Steven Morgan, CEO of Cluttons Middle East said: "We expect 7,400 units to complete in 2016, 10,300 in 2017 and a further 13,600 in 2018, with the new schemes launched during the past quarter, helping to even out the balance between villas and apartments. Over the next three years, 48% of the units delivered will be villas."
The report highlighted that away from the top end of the market, the vast majority of residential submarkets have seen little or no change in values this year, partly due to the steady appeal of apartments to the buy-to-let investment community.
Morgan added: "We've seen the popularity of off-plan property sales persist, partly fuelled by the fact that off-plan residential property prices are often 20-30 percent lower than completed secondary stock, which in essence might allow buyers to bypass some of the stringent lending criteria and also possibly avoid the need for a mortgage altogether."
Since the introduction of the Federal Mortgage Caps almost two years ago, the issue of affordability and accessibility to Dubai's housing market has risen in prominence.
According to the report, high end apartments at Dubai Marina (-3 percent) and apartments on the Palm Jumeirah (-2.5 percent) have recorded the most significant price decreases during the first nine months of 2015.
Morgan said: "The term luxury is of course very subjective on a global level and compared to other major world cities such as London, Dubai still offers what is perceived to be good value for money, which is aiding the performance of this segment of the market."