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Mortgage enquiries for lower priced properties in the UAE have increased by 59 percent between 2018 and 2019, thanks to lower property prices and favorable interest rates, insights from Mortgage Finder revealed.
The trend, however, is likely to continue this year resulting in a potential increase in real estate transactions.
Ismail Al Hammadi, CEO of Al Ruwad Real Estate told Zawya that he expects real estate demand in the UAE to be extremely positive in 2020.
“Marked by Dubai Expo, 2020 has the potential to become a very fruitful and interesting year with glaring achievements. Dubai will see a surge in tourist arrivals with almost 25 million expected to visit, increasing the investors’ appetite for the city’s real estate offerings,” Al Hammadi said.
According to real estate insights and data platform, Data Finder, Dubai registered a 20 per cent rise in the volume of registered property sales transactions in 2019 compared to 34,961 transactions in 2018.
Data Finder said that there were more than 45,000 units completed last year, which was the highest number of units completed in one year over the last five years.
“While we expect that the current supply will continue to put further pressure on prices, we will definitely witness a good year in terms of sales transactions,” Al Hammadi added.
According to Mortgage Finder, the mortgage consultancy part of Property Finder, there’s a 11 percent increase in enquiries from clients earning between 10,000 UAE dirhams ($2,722) to 12,000 UAE dirhams per month between 2018 and 2019. Approximately 5 percent of enquiries to Mortgage Finder come from those in this income bracket.
The average property price considered by those in this income bracket is 795,000 UAE dirhams.
Interest rate cuts in 2019 were certainly an encouragement for potential real estate investors.
The UAE Central Bank cut interest rates three times last year in line with the US Federal Reserve.
In 2018, the average mortgage interest rate was in the tune of 3.99 percent according to Mortgage Finder. However, in recent months, there have been notable decreases, with some rates as low as 2.75 percent fixed for one year it said.
“When banks calculate affordability and stress tests today, those who may not have passed the tests previously have a better chance of doing so now as a lower property price and interest rate means lower monthly mortgage repayments,” said Richard Boyd, Director at Mortgage Finder.
“There is no doubt that this is currently a buyers’ market, and it’s great that some of those who may not have been able to buy earlier are now getting the opportunity to invest in the property market here and own their home. Whichever end of the income scale you are on, if you are interested in buying in the UAE and have your down payment ready, now is a great time to do so,” Boyd said.
(Reporting by Gerard Aoun; editing by Seban Scaria)
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© ZAWYA 2020
