According to a Reuters poll of real estate industry analysts, property prices in Dubai will increase this year and the following year, but more slowly than previously anticipated. This is being fuelled by a weaker than initially anticipated demand for Dubai real estate brought about by higher mortgage rates and the increasing cost of living.
Dubai’s real estate market recovered swiftly from its substantial downfall in 2020. This was thanks to an economic recovery driven where people were quick to snap up luxury apartments when the emirate quickly relaxed pandemic restrictions compared to most other cities worldwide.
CAUSES OF THE SLIGHT CHANGE IN OUTLOOK FOR DUBAI REAL ESTATE
An abundance of residential properties and rising interest rates, according to most real estate analysts surveyed by Reuters, will affect prices in the coming months.
The consensus prediction of 10 real estate analysts surveyed between August 15 and September 2, also suggests how home price increases would moderate to 6.5% in 2022 and 3.0% in 2023, down from 7.5% and 4.5%, respectively, in a May poll.
This forecast contrasts sharply with predictions for declining home prices in other global real estate markets including Canada, Australia, and New Zealand for this year and the next year.
Demand for residential homes has hit an all-time high this year, but this trend might alter owing to the rising cost of living, increased mortgage rates, and projected new supply. For example, prices for smaller apartment units have already stabilized in places where there will likely be a lot of new supply, and growth is expected to be negative in the near to medium term.
Developers are also highly unlikely to raise real estate prices significantly given that Dubai is still a market dominated by buyers. But also given that the market has not attempted to drive up prices recently since there has been an oversupply of real estate in many locations. So, a relatively affordable real estate market in Dubai could persist for a while when compared to the rate of growth in property prices recently.
Yet, Asteco Property Management, Deloitte, Property Monitor, Morgan's International Realty, and ValuStrat, all claimed that for housing to become more affordable, typical Dubai house prices would need to drop by 5-20%. So, for an affordable housing market to truly exist in Dubai, prices would have to fall. This seems unlikely though given the consistently strong demand for real estate in Dubai. As Reuters convey, we will more likely see slower growth in Dubai’s real estate prices instead.
