Dubai is again the world’s weakest housing market, according to Global Property Guide’s survey. Dubai residential property prices plunged 11.72% during the year to Q2 2015, the second consecutive quarter of house price falls, and the biggest y-o-y drop since Q1 2011. House prices dropped 4.28% during the latest quarter, while global house price boom continues.
Dubai’s property market has been one of the world’s most volatile. Dubai saw one of the world’s worst housing crashes with house prices plunging by 53% from Q3 2008 to Q3 2011. The housing market started to recover in 2012, recording double-digit house price increases from Q2 2012 to Q4 2014. The property market started to show weakness in the second half of 2014, amidst housing oversupply, subdued demand and slower economic activity.
During the first half of 2015, the number of residential property transactions plunged by 69% while the value of transactions tumbled by 66% from the same period last year.
About 20,170 dwelling units are expected to be delivered this year, almost double the annual average of 11,600 units in the past three years, according to REIDIN.
Real estate consultant Jones Lang LaSalle and the ratings agency Standard & Poor’s expect that average house prices in the emirate could fall by between 10% and 20% this year. Moody’s sees no repeat of the epic crash of 2009, but it expects a 10% to 15% price correction this year.
The UAE’s economy is projected to expand by only 3.15% this year, due to falling oil prices, after GDP growth of 3.6% in 2014, 5.2% in 2013, 4.7% in 2012 and 4.9% in 2011, according to the IMF. Dubai, which has a more diversified and less oil dependent economy, is expected to grow by about 5% this year.