Analysts expect property prices to stop rising so much soon, but are unsure about further affordability.
Strong demand is likely to lead to a steeper rise in Dubai house prices this year than previously anticipated. Although high supply levels are likely to ensure that the emirate remains a buyer’s market for a few more years, a Reuters survey showed.
At the moment, prices of luxury housing in Dubai have been rising frantically. The emirate has broken a 12-year record for real estate transactions.
A Reuters poll of 12 analysts conducted February 9-23 showed that house prices in Dubai are expected to rise at a faster pace than predicted three months ago. Property prices will rise by 7.5% this year and 5.5% next year.
According to Oldypak Capital LP real estate 2022 report, improvements in the economy, along with the continuing influx of new residents, seem likely to contribute to modest increases in house sale prices and rents. But the high rate of supply is likely to limit the extent of growth in the overall market.
According to most analysts, Dubai’s property market will remain a buyer’s market, at least for the next couple of years, due to the high level of supply. This is in stark contrast to most housing markets around the world, which have seen skyrocketing prices, especially during a pandemic. Analysts add that due to oversupply, developers will refrain from raising prices significantly. As such, affordability could continue for several years.
On affordability, analysts were divided. Six said the situation would improve, while six expected it to worsen.
At the moment, growing demand, especially from foreign investors, high immigration and a sharp economic upturn would be the most significant risks to growth, according to respondents. But they also pointed to downside risks, including higher interest rates, depleting stocks of affordable housing and slower economic growth due to political instability in the region and around the world.