Dubai's real estate market recorded its first quarterly house price decline in four years, with prices falling more than five percent between June and September, Knight Frank said on Monday.
The Knight Frank Global House Price Index showed property prices in the emirate slumped 5.2 percent in the three-month period but were still up by 12.5 percent compared to Q3 2013.
Knight Frank said the current mismatch between demand and supply is behind the fall.
"Residential sales have fallen sharply in recent months and there is a steady stream of new schemes reaching completion, which in turn is exerting downward pressure on prices," the real estate consultancy said in a report.
"With price growth in Dubai and much of Asia slowing, the Knight Frank Global House Price Index has lost its main engines of growth resulting in a rise of just 0.1 percent in the third quarter of 2014," it added.
Globally, house prices increased by 3.3 percent in the 12 months to September.
Ireland topped the annual rankings with prices rising 15 percent on average year-on-year.
Knight Frank's report added: "For the first time in two years the Global House Price Index came close to falling into negative territory. Muted growth in the third quarter comes on the back of jitters over the global economy, a lingering malaise in Europe and, in the US, a slower-than expected housing recovery."
In China, 58 of the 70 cities tracked recorded a decline in house prices over the 12-month period to September
Kate Everett-Allen, Knight Frank International Residential Research, added: “Fewer countries are reaching the heights of double-digit price growth but it’s not all bad news. No country has recorded an annual fall in house prices in excess of 10 percent for three consecutive quarters suggesting a slight convergence in the performance of the 54 housing markets tracked.”
In October, the International Monetary Fund said increases in Dubai's property prices have moderated quite a lot and it was now less concerned about them than it was in May.
The IMF has previously warned that rapid rises in Dubai real estate prices, which earlier this year were in some cases a third higher than they were 12 months previously, could lead to another bubble and then a crash in the emirate.
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