Mortgage deals in Dubai are record high, property prices are 1.5 percent up

The market continues to demonstrate signs of recovery, says Property Monitor.

Property prices in Dubai continued to increase slightly, while loans hit a record high in recent weeks, a sign that the market is bouncing back from the coronavirus slump, a new report revealed.

Prices for apartments and villas across the emirate registered an average increase of 1.5 percent in December compared to November, according to the Property Monitor Dynamic Price Index. In the same month, mortgage transactions hit a record high of 2,192.

However, the property market remains subdued compared to 2019, with total transaction volumes for 2020 still lower by 13.5 percent compared to 2019.

As of December 2020, prices of residential units in Dubai stood at USD 226.7 per square foot, down 32.5 percent from the market peak in September 2014.

Property Monitor said that the rates are now 6.1 percent away from the market trough of April 2009 and at levels last recorded in June 2009, when they were at USD 226.2 per square foot.

Still, Property Monitor believes, that the market is showing signs of resilience and that it is on its way to recovery. This is due to the recent peace agreement between UAE and Israel, that have stimulated the flow of new international investors in the country, looking for opportunities in the real estate sector.

Compared to previous years the pace of decline in 2020 slowed dramatically, which is encouraging. A year-to-date decrease in prices of 3.4 percent was recorded in the 12 months to December 2020, an improvement compared to the 12.9 percent fall for the same period in 2019.

In addition to that, December recorded 3,772 transactions, up by 25.5 percent compared to the same month in 2019.

'Overall, the sector has displayed resilience in the face of the pandemic, helped by government measures and with movement restrictions triggering people to upgrade their living spaces,' said the report. 'We expect transaction volumes to maintain their upward momentum as long as quality and well-priced ready inventory is available to fulfil strong buyer demand.'

Real estate analysts are split on whether the market is on the road to recovery. While Property Monitor claims that the real estate sector is bouncing back, other industry sources suggest that there will be further declines not just in sales prices but also rents this year.