Prices slow down on a monthly basis, but are still significantly higher compared to last year: ValuStrat
According to ValuStrat, after more than a year of exceptional growth, real estate prices in Dubai are starting to decline as more housing units are being introduced, mortgage interest rates are rising, and rising inflation worries investors.
The latest citywide ValuStrat price index (VPI) of a real estate consulting company rose just 1.1 percent in June compared to the previous month. The monthly growth in the capital value of some properties has also slowed down, while prices in some places have not undergone any changes.
"The pace of price growth for villas and townhouses in Dubai continued to slow down in June," ValuStrat said, confirming that the pace of sales had been declining for several months.
In June last year, the real estate market of villas in Dubai saw a moderate monthly increase in the cost of capital by 1.7 percent. This contrasts with last year, when prices increased by an average of 2.3 percent each month.
According to Declan King, managing director and head of the real estate group ValuStrat, the decline in prices, especially in the segment of villas on the market, has been going on for several months.
He said price caps in some locations, as well as "affordability limits" for shoppers, were likely to have been reached.
"Rising cost of living, rising mortgage rates and improved supply in the off-plan villa market are other factors," King Zavier said.
The Dubai real estate market has been showing exceptional year-on-year growth since the end of 2020, which is facilitated by high demand from domestic and foreign investors.
Data from ValuStrat showed that several locations in Dubai, such as Mudon and Dubai Hills Estate, saw slight price increases in June with monthly increases of 0.9 percent and 1.1 percent, respectively.
However, on an annual basis, the average prices for villas are still 32.2 percent higher. In premium-class areas, such as Arab Ranches, Jumeirah Islands, Lakes and Meadows, prices increased year-on-year by 38.8%, 36.6%, 34% and 33%, respectively.
In the apartment segment, the lowest annual price growth was observed in Dubai Production City (0.5 percent), Discovery Gardens (0.8 percent) and Motor City (1.5 percent).
In other places, such as Dubai Sports City, no price changes were recorded in June compared to last year.
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