Dubai’s housing market could be approaching ‘tipping point’ as investors continue to exit the market and the availability of debt dries up, according to HSBC.
In its monthly market survey on the United Arab Emirates, released this week, the bank reported that units for sale in Dubai jumped 36% in November on the previous month as ‘the trend from holding to selling seen in October persisted into last month’.
Over the last few years Dubai’s housing market had been growing at breakneck speed since - between the fourth quarter of 2007 and the second quarter of 2008 alone, residential sale prices increased by 37%.
But in recent weeks investors in Dubai have been hit by lack of credit – which has intensified in the emirate over the last two months – and a clampdown by the government on speculative trading, which makes it harder to sell or ‘flip’ property on quickly at a profit.
HSBC said that despite advertised house prices rising by four percent in the emirate between October and November, erasing an identical fall the previous month, the overall picture is one of a rapidly cooling market.
The bank reported that this was down to an increased amount of small apartments being put on the market in recent weeks – which command high prices on square metre basis.
The gloomy picture follows HSBC’s October report, which said property prices in Dubai fell four percent between September and October, with the price of villas tumbled 19%.
In Abu Dhabi, overall asking prices were down 1% month on month, but while villa advertised prices declined by 15% prices for apartments, which account for 81% of the listings of property for sale, were up by 3%, the bank said.
It added, ‘While advertised prices in both Dubai and Abu Dhabi seem to be holding up for now, given (1) the liquidity drain (2) the stock market’s negative wealth effect and (3) a rising concern on job security, particularly in Dubai, we feel that the market may be approaching tipping point.’