Back in April, we put out the very first Consumer Confidence Tracker. It's a quarterly report that's designed to track everything about how UAE residents are managing their finances - and how financially confident they're feeling about life in the country.

We surveyed over 1,400 UAE residents to come up with the results of the report, making it one of the largest of its kind. We quizzed respondents on everything to do with their financial worlds - how much money they're remitting, how much they're saving, whether they're paying more or less in rent, how much they're paying in school fees. And then, having taken respondents through everything, we ask the big question - how confident are you with your financial health now, compared to 12 months ago?

During the first quarter of the year, we found that consumer confidence had actually taken a hit since 2017. Just 19 per cent said that they were more confident, while 43 per cent said they were less confident. The rest (38 per cent) said they felt about the same as they did 12 months ago.

But now we've just released the Consumer Confidence Tracker for the second quarter of 2018, and we can see that confidence is slightly up, quarter-on-quarter.

As in the first quarter of the year, just 19 per cent feel more confident about their finances than they did 12 months ago, but the number of people who are less confident has dropped to 41 per cent. It isn't much, but an improvement of two percentage points suggests that consumer confidence could be improving as the year goes on.

And that's despite the fact that, according to our research, more people are struggling with the cost of living. As part of the tracker, we ask what the impact of value-added tax (VAT) has been on respondents' cost of living. In Q2, the majority of respondents (55 per cent) said that they're getting by, but have had to make cuts on some types of spending, and almost a third said that they've barely noticed the increased prices.

But 14 per cent said that they're now struggling to make ends meet as a result of consumer prices going up. That's two percentage points more than the number of people who said the same thing in the first quarter of the year. As a result, we can deduce that the higher cost of living in the UAE has hit some people harder than was perhaps intentioned.

So why is consumer confidence up? Well, it's quite simple, actually. Job confidence has improved. With the majority of UAE residents being expats, and the vast majority of them here for work that they might not otherwise find in their home countries, it's hardly surprising that job confidence has such a big effect on overall consumer confidence.

And the numbers look good for those holding down jobs in the UAE. During the second quarter of the year, almost 35 per cent of respondents reported seeing a salary raise over the past 12 months, and 62 per cent expect a raise in the next 12 months. But, quite apart from that, the number of people who report confidence in keeping their jobs has gone up - from 73 per cent in the first quarter of the year to 78 per cent in the second. If you're here for work, and you're confident about keeping your job, it's only natural that you'd feel more confident about the state of your finances.

And indeed, these indicating factors have led to some changes in behaviour over the past quarter. Compared to Q1, six per cent more people are sending more remittances home than they were last year, and respondents have reported being more able to regularly save portions of their salaries, too.

One area where UAE residents have struggled to make savings, though, is in housing. Despite report after report telling us that rental rates have declined across the country (by up to 20 per cent, depending on the area and the report you're reading), it would appear that the majority of UAE residents are still paying the same (if not more) to rent their homes.

Indeed, just one in five are paying less in rent than they were this time last year, about the same as we saw in the first quarter of the year. But 39 per cent are actually paying more. And that's not because they've moved to bigger, more expensive properties - just 10 per cent have moved in the past 12 months. In fact, 20 per cent of our respondents are actually paying more in rent than they were last year for the same property.

Why is this? Well, our suspicion is that most UAE residents don't want to deal with the hassle and expense of moving. There may be a better deal just down the road, but if it only saves you five per cent to 10 per cent on rent, is that enough to justify the costs you'll incur from moving? The consensus appears to be that no, it isn't.

The writer is chief executive of Yallacompare.com. Views expressed are his own and do not reflect the newspaper's policy.

 

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