Dubai’s property surge slowing down
Dubai’s property market prices are finally cooling, a report by Phidar Advisory has found.
Following an overheated May and June, in the first six weeks of Q3 2014, average lease rates have dropped by 5.6 per cent for single family homes and 9 per cent for apartments.
In a report released on Tuesday, August 26, the Dubai-based consultancy firm explained that “although the market is technically undersupplied, rent inflation has slowed. This is likely due to ambitious expectations in H1-2014 that pushed up asked rents beyond affordability constraints. Housing demand is relatively elastic, but alternatives, such as sharing and relocation to other emirates, exist and form an – albeit pliable – ceiling.”
In many ways, news that the property market is gradually correcting its earlier surge will come as a relief as it proves the market is not as volatile as some feared.
The wounds from 2009 when the market overheated and then violently crashed are still very much fresh, amongst homeowners and investors alike.
Following reports in July that the rent prises in Q2 had shot up by an average of 24 per cent year-on-year, on the back of a surge of 23 per cent in Q1, the idea that Dubai’s property was once again overheated was surreal.
As such, the current cooling period, so long as it is gradual and short-lived, ought to be welcomed as it suggests that the market is stable and capable of containing growth and its aftermath.