Home Price Growth Slows in Dubai

Luxury home prices in Dubai increased by the slowest pace in more than a year in the last quarter of 2013, amid a “flurry” of cooling measures introduced in the final months of 2013, according to a new report.

In the last quarter, both prime apartment and villa prices increased 15 percent year-over-year, seen as a slowdown when compared to the average growth rate of 21 percent recorded in the previous four quarters, property consulting firm Knight Frank said in a report.

After home prices in Dubai increased at a rapid pace last year, cooling measures were introduced due to fears of a reemerging housing market bubble.
Dubai increased the transfer fee from two percent to four percent to prevent excess speculation in the market.

The United Arab Emirates central bank also introduced caps for mortgages lenders provide for nationals and foreigners.

Dubai developer Emaar Properties has also taken steps to create a more stable housing market by banning real estate agents from “flipping” homes before they are completed.

However, home prices in Dubai could still increase by 10 to 15 percent this year, due to limited new home supply and a “boost to confidence” after Dubai was elected to host the World Expo in 2020, the report states.

“Given that prime residential prices are still almost a third below their previous peak.we think there is decent scope for prices to play “catch-up,” the report added.