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Falling property prices make Dubai a more mature real estate market
Falling property prices in Dubai are not totally bad news as it will make the emirate’s real estate market more mature, a new analysis report says. The report from international real estate firm Knight Frank explains how over the past decade, Dubai has been on a real estate rollercoaster ride of boom, crash and recovery. Indeed, property values halved between 2008 and 2010, but then rose phoenix like from the desert to regain most of their losses by 2014. However, the rallying prices of 2013 and 2014 set off the alarm so authorities had to react to prevent a market boom and crash cycle. At this point Dubai’s market regulators, wielding mortgage caps and a doubling of transaction fees, stepped in to reduce speculation and the report points out that this combined with other factors such as deteriorating oil prices, currency fluctuations and a series of economic and political failures in different parts of world, means lower levels of demand from most regional and international group of buyers looking to purchase properties in Dubai. On top of this there has been an excess of new build supply and the net impact has been a 12% fall in mainstream property prices over the 12 months to June 2015. ‘Nevertheless, falling prices are not totally bad news. With the government stepping in to curb speculative activity through tightening mortgage regulations and capping price increments, it is evident that lessons has been learnt from the 2008 downturn and the market is heading steadily to be more mature and better controlled,’ says the report. ‘More interestingly, with price falls continuing to outpace rental value declines, initial yields are rising. Reaching more than 7% in rental yields in the mainstream property segment, Dubai still stands tall among real estate capitals in the world for investor seeking income generating properties,’ it adds. It also points out that the rate of decline in prime residential prices of 4.5% in the year to June 2015 was smaller compared to the mainstream segment while in sub-markets, the picture is a bit more positive as well. In demand areas are mostly in the prime segment including villas, townhouses and apartments in the Palm, Emirates Hills, Dubai Marina and Downtown for example. ‘Even during the 2008 downturn, prime properties saw lower levels of declines compared to less established areas,’ Diaa Noufal, of the MENA research unit at Knight Frank Dubai office. The report also looks at the wider region. In Qatar foreigners have been able to buy property since 2004, although restricted to a few specific areas. Demand has been rising, albeit with a slowdown this year following the oil price crash and regional instability. Buyers tend to be residents of countries within the Gulf Cooperation Council, although the number of European buyers is rising. Demand for Oman property from across the Middle East and from India and Pakistan has risen in recent years. Knight Frank says this is partly due to… Continue reading
Flats in the UK have seen the biggest average price rise in last decade
The average price of flats in the UK has risen by 60% since 2005, compared with an average of 38% for all properties, according to new research. The report from the Halifax, one of the UK’s leading home lenders, also shows that detached homes have seen the smallest increase at 21% while bungalow prices rose by 28%. The figures show that the increase for flats over the last decade is £87,550 or £730 per month from £145,874 in 2005 to £233,424 today, but a big proportion of this is due to the rapid increase in flat prices in London which are up by 67%. A typical flat currently costs less than £120,000 in the North, East Midlands, Wales and Yorkshire and the Humber, and between £120,000 and £145,000 in the North West, West Midlands, Scotland and East Anglia. At £370,281, a typical London flat is considerably more expensive than flats anywhere else in the UK. While flats have been the best performing property type over the past decade in Greater London, Scotland and the South West, there are regional differences. Semi-detached properties have risen most in value in the South East, East Anglia and the East Midlands, whereas terraced homes have been the best performing property type in five of the 11 regions, the North, North West, Yorkshire and the Humber, West Midlands and Wales. The average price of a terraced home is between £119,000 and £143,000 in all regions outside southern England, the data also shows. Semi-detached and terraced homes have remained the most popular types of property purchased over the past 10 years. Combined, these two types represent 59% of all home sales in 2015, up marginally from 58% in 2005. Semi-detached homes have risen in popularity among first time buyers, accounting for 28% of purchases in 2015 compared with 21% in 2005. However, flat sales have fallen from 20% of all property sales to 17% over the past decade. ‘Flats have recorded larger prices gains over the past ten years than any other property type. The national increase in flat prices has been led by London where flats account for roughly one in two property sales, substantially higher than for the country as a whole,’ said Martin Ellis, housing economist at the Halifax. ‘Overall, semi-detached and terraced homes have remained the most popular types among purchasers. First-time buyers have switched to some extent away from flats, reflecting their large price increases, towards semi-detached homes over the last decade,’ he added. Continue reading
UK lettings agents report fewer rent rises and new homes on market also falls
The number of letting agents reporting rent increases for tenants has fallen month on month while the number of homes for rent is also down, according to the latest UK rental sector report. The analysis from the Association of Residential Letting Agents (ARLA) shows that for the first time this year, the number of ARLA agents seeing rent hikes for tenants has decreased from the previous month. The report reveals only three in 10, some 33%, of agents reported an increase in August, the lowest since April this year and a drop from 37% last month. Tenants in the South West however are not benefiting from this. Some 42% of agents in the region are continuing to see rent prices hiked, up four percentage points from last month. This is compared to only 12% of agents in the North West who have witnessed a rent increase. In Wales, tenants are worse off too. The number of landlords putting rents up for their tenants has increased threefold from July. This month 36% of letting agents in Wales saw increases, up 25% from July when just 11% agents reported rent hikes. The data in the report also shows that after a spike in the number of houses available to rent last month, supply has fallen back down to levels seen in June 2015. ARLA letting agents managed an average 178 properties per branch in August, compared to 189 in July. The report found that the number of house hunters in the rental sector increased marginally in August. Letting agents reported an average 36 prospective tenants registered per branch, compared to 35 in July. The number of properties available to rent in London continued to fall in August, pushing demand for housing even harder in the capital and putting further pressure on house hunters. With 110 properties registered per branch, compared to 117 in July, the task of finding a property in the capital’s rental sector is becoming increasingly difficult. ‘Our findings this month are good news for the majority of tenants, as less are experiencing rent hikes. However, a third of agents are still seeing landlords pushing rents up, which reflects the sorry state of affairs in the market,’ said David Cox, ARLA managing director. ‘With increasing pressure on the dwindling supply of housing, and the number of house hunters growing, rent increases are unfortunately very common as one in three tenants are experiencing,’ he pointed out. ‘Despite the fact they have fallen this month, it’s likely they will go back up again over the next few months,’ he added. Continue reading
