Dubai house prices up 2pc year-on-year in Q1

DUBAI: Dubai house prices climbed 2 per cent year-on-year in the first quarter, their first annual rise since the 2008 financial downturn, but oversupply would pressure prices going forward, Colliers International said yesterday.

Prices in the Gulf Arab emirate, home to the world's tallest building, rose 4 per cent in the first quarter from the previous quarter.

That marked the third consecutive quarterly rise, Colliers said, in a sign that the property market is stabilising.

House prices in Dubai have slumped some 55 per cent since their peaks in the third quarter of 2008.
"There will be significant oversupply in the market by the end of the year so it is anticipated the index will experience fluctuations going forward," said Ian Albert, the firm's regional director, referring to its house price index.

"What will be important to watch is how much of the supply matches the end-user demand for community-oriented developments," he added.

Colliers International estimates that 41,000 homes will enter the market by the end of this year, mostly in the low to mid-income segments.

Colliers International said that while demand is not expected to match the supply growth.

Colliers remained unclear as to whether future supply would have a negative impact on established projects, which are typically more resilient to market conditions.

Albert added that while banks are starting to lend again, it was unlikely that all of the supply would meet the new and much stricter lending criteria.

Apartment prices in Dubai rose 6 per cent in the first quarter from the previous quarter, villa prices climbed 2 per cent while townhouse prices fell 4 per cent, the index showed.

House prices and rents are set to fall 10 per cent more in 2010 and not recover until 2012, a Reuters poll showed in April.

By Reuters