Dubai House Prices Achieve Sustainable Growth
Dubai's residential property market appears to be stabilising with the Colliers International Q2 2014 House Price Index recording a moderate 3% increase over the quarter. The report indicates that the key measures introduced by the government to curb the growth in house prices at the end of last year have had a positive outcome. The index, which was established in 2008 using actual mortgage transaction data from a consortium of financial institutions, highlights a slowdown in the rate of growth achieved over previous quarters. According to the report, the growth in house prices during Q2 dropped to 3% following the 5% increase seen at the end of Q4 2013 and Q1 2014. Overall the index increased by 5 basis points from 165 points in Q1 2014 to 170 points in Q2 2014, while the blended average house price for Q2 2014 is approximately at AED 1,512 per ft² (16,275 m²).
Commenting on the report, Ian Albert, Regional Director at Colliers International said: "Dubai's property market made world headlines this year with residential property prices increasing by 20% year-on-year. The pace of growth over the last quarter has slowed considerably to a more modest level, this can be largely attributed to the forward thinking measures introduced by the government to dampen property speculation and safeguard the market."
Given the mortgage cap that was introduced at the end of last year limiting the loan to value ratio on properties over Dhs 5 million to 65% of the value for expatriates and up to 70% for nationals, the townhouse and apartment market was very active over the quarter. Both sectors of the market registered a 5% increase, while villas saw no change. In terms of the top developments, Palm Jumeirah, Motor City (apartments) and Jumeirah Lake Towers recorded the highest year-on-year growth in sales prices, while Dubai Marina, Downtown Dubai and Jumeirah Lake Towers saw the highest number of transactions.
While the results of the report reflect a deceleration in growth, the global real estate firm remains optimistic about the year ahead.
"While it's too early to call a trend, the signs are mounting that price growth is easing back to a more sustainable pace," Albert added.
Key report findings:
· Increase in the overall index of 3% between Q1 2014 and Q2 2014
· Year-on-year increase of 20% between Q2 2013 and Q2 2014
· Blended average rate for residential property increased from AED 1,463/ft² to AED to 1,512 per ft² Q2 2014.
· Apartment prices increased by 5% in Q2 2014 to AED 1, 584 (AED 17,050 per m²) compared to AED 1,504 (AED 16,182 per m²) in Q1 2014
· Villa prices show no change between Q1 2014 and Q2 2014 remaining at AED 1,474 (AED 15,866 per m²)
· Townhouse prices increased by 5% in Q2 2014 to AED 1,269 (AED 13,659 per m²) compared to AED 1,208 ft2 (AED 13,002 per m²) in Q1 2014.
