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Prime property market in Dubai sees sales fall
Dubai luxury home prices remain relatively resilient despite a drop-off in sales activity, according to the latest analysis of the Emirate’s residential real estate market. Sales in Dubai’s prime segment, comprising properties worth over AED10 million, hit the lowest level since the end of 2012 in the final three months of 2014, the research document from international real estate firm Knight Frank shows. Despite this however, Knight Frank’s prime residential price index saw a relatively modest fall in the three months to December of 1.2% quarter on quarter, the second consecutive quarterly fall. Indeed an examination of the data shows that these two declines nearly reversed the increases seen in the first half of last year, leaving values just 0.3% higher year on year in the fourth quarter of 2014. Despite the lower level of transactional activity however, the nationalities investing in real estate in Dubai remained diverse. Data from the Dubai Land Department (DLD) shows that, in 2014, more than 140 nationalities bought property in the Emirate. A breakdown of the figures shows that Indians remained the top foreign property investors, spending around AED18.1 billion, while the British and Pakistanis invested AED9.3 billion and AED7.6 billion, respectively. Overall though, the Emiratis spending AED 22.8 billion were the leading real estate investors, accounting for approximately 21% of the total spent last year. Between 2013 and 2014 Indians and Saudis increased their levels of real estate investment in Dubai while the British and Pakistanis, as well as the aggregate of the remaining GCC countries, spent 1% to 12% less. The total level of real estate investment from all other countries also fell in 2014, by almost 5% year on year. An assessment of web traffic to KnightFrank.ae’s website shows that around 44% of the total viewings in 2014 originated from the UAE. But the report points out that a significant proportion of these will have been expats. What’s more, another 18% of those clicking through to Knight Frank’s UAE website were doing so from the UK, while 7% were from India and 4% from the United States. As a proportion of the total, the level of web traffic from Russia also fell year on year in 2014 however, this did not come as a surprise since the rouble has nearly halved against the US dollar, to which the UAE dirham is pegged, since July, making it significantly more expensive for this nationality to buy property in Dubai. Finally, the strengthening of the US dollar and the weakness of the euro also means that demand from European buyers has also begun to wane, in turn adding further downward pressure on residential property prices in Dubai. Continue reading
UK house price optimism rebounds, latest index suggests
House price optimism in the UK rebounded in February as inflation continued to fall and the expectation of an interest rate rise receded further. According to the Halifax Housing Market Confidence Tracker report last month saw a rallying of house price optimism among consumers, from an 18 month low of +52 at the start of the year to +60 in February. It was +62 December 2014. This optimism is reflected in the outlook for both buyers and sellers, with buying sentiment up to its highest level since the Confidence Tracker launched in 2011 at net +35. At the same time selling sentiment has reached an all-time high and now stands at +27. However, this still this doesn’t tell the whole story as the underlying picture is a cautious one, with 57% predicting flat or modest house price increases of less than 5% at best over the next 12 months. And despite inflation falling to 0% in February and various MPC members saying the next interest rate move is as likely to be down as it is up, 43% of consumers believe mortgage interest rates will be higher than they are now in a year’s time. ‘With inflation now at its lowest level since records began and the chances of the next interest rates change reportedly just as likely to be down as up, consumers are feeling more optimistic about the housing market again,’ said Craig McKinlay, mortgages director at the Halifax. ‘The traditional slow start to the year for the housing market has already begun to give way to increased activity, but consumers remain relatively cautious. For sustainable long term growth we need a period of stable growth and a more comprehensive house building programme,’ he added. Continue reading
Irish property prices fall for second month in a row
Residential property prices in Ireland fell by 0.4% in February, the second monthly decline in a row, the latest index data shows. The fall last month comes on the back of a 1.4% decline in January amid concerns that the country’s real estate recovery could be stalling. In Dublin, the decline was more pronounced, with average prices falling by 0.7%, according to the data from the Central Statistics Office. However, despite this fall, residential property prices remained up 14.9% on an annual basis. In Dublin property prices were still 21.4% higher than in February 2014. A breakdown of the figures shows that Dublin house prices fell by 1% in February whilst Dublin apartment prices increased by 2%. However, a spokesman said that it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. In the rest of Ireland residential property prices were unchanged in February. However, prices were still up 8.2% compared with February 2014. At national level residential property prices were 38.7% lower than their peak level in 2007. Dublin house prices were 37.6% lower than their peak, Dublin apartment prices were 43.3% lower than their peak and Dublin residential property prices overall were 39.3% lower than their highest level. Outside of Dublin residential property prices were 41.9% lower than their highest level in 2007. ‘With prices continuing to rise more quickly than earnings affordability constraints are beginning to have an impact. This has removed some of the heat that was evident in the market in the middle of last year,’ said John McCartney of Savills. ‘Agents are now reporting that buyers are no longer in a frenzy to buy for fear that prices will run beyond their means. This is a very positive development as expectations of rapid price growth can become self-fulfilling and can quickly lead to overheating,’ he added. It is a welcome slowdown in Irish house price inflation rather than a collapse in prices, according to Conall MacCoille, chief economist at Davy Stockbrokers, who said at over five times average incomes, house prices no longer look cheap. ‘This slowdown is not surprising or undesirable. Ideally, Irish house prices will now rise in line with nominal wages so affordability is not stretched further,’ he explained, adding that it was too early to say what kind of dampening effect new central bank restrictions on mortgage lending will have. The Economic and Social Research Institute (ESRI), an independent think-tank partly funded by the Irish government, said that while the measures may slow down house price growth, this could come at the expense of rising rents and fewer houses being supplied amid major shortages of supply in Dublin. Continue reading
