Majority of UAE residents want to own a property in the country, but higher property prices is a concern, according to a finance comparison website.
A report issued on Monday by compareit4me.com said 76 per cent of residents wanted to buy a property in the country, but listed various factors, mainly high property prices, among the reasons stopping them.
And that is despite the fact that apartment sale prices in Dubai dropped by 3.6 per cent from April 2014 – April 2015 and villa prices dropping by 3.7 per cent over the same period. The company did not provide information of price fall calculation or the size of the survey.
In October 2015, JLL, a global property consultancy, said apartment prices in Dubai have fallen 11 per cent in the past 12 months and will decline further because of tighter regulations, rising inflation and a strong dirham.
Nearly 36 per cent of the participants said high house prices were the prime reason for them to opt for renting than buying, with 12.4 per cent stating the mandatory 25 per cent down payment set by UAE Central Bank was stopping them from purchasing a house.
The report also stated 54 per cent of residents still opted to rent than buy, citing they were uncertain as to how long they would remain in the region.
In fact, US executive recruitment company Stanton Chase found that expatriate executives are now staying in the UAE twice as long as they were five years ago. Regardless of modest salary increases and improving economic conditions in the West, the average stay of senior professionals has increased to four-and-a-half years.
This is almost double the duration recorded back in 2007.
Despite all the regulations and high price, the report said that UAE banks were actively trying to encourage more residents to buy property by offering more home finance solutions and competitive mortgage rates. Banks including Mashreq, HSBC, Standard Chartered and Commercial Bank of Dubai are offering mortgages with flat rates as low as 1.6 per cent.
“The long term outlook for the real estate market in Dubai looks favourable for investors, particularly in the run up to the Dubai Expo. However, there’s every chance we could see prices going up and down before that, so it’s important longer-term investments are considered,” Jon Richards, CEO compareit4me.com, said.
He added: “The number of people staying beyond two years is increasing, so it’s worth residents doing the sums to calculate if home ownership would be more beneficial for them.”
For example, buying a villa in The Meadows, Dubai, costs around Dh6 million; over five years the cost of rent on the same property would amount to around Dh1.4 million, thus becoming an owner and missing out on capital appreciation.
Content courtesy : emirates247.com