Dubai property prices fell month on month for the first time this year in June, although they remained more than 10 per cent higher on an annual basis, according to a report by Property Monitor.
Prices declined by 0.31 per cent in June, compared with May, the second time they have fallen in the current cycle, the other time being in November last year, the report said.
The Property Monitor Dynamic Price Index, which tracks residential property price trends throughout 42 communities in Dubai, decreased by 0.45 index points to 142.25, from 142.70 in May.
In June, average property prices stood at Dh1,019 ($277.4) a square foot, the report said. They were last at these levels during the recovery phase of the previous market cycle between July and August 2013, it said.
The slowdown and cooling of price appreciation should not be an immediate cause for concern at this stage, rather a welcome sign of a healthy market that can move forward at a sustainable pace whilst continuing to grow.
However, it was the second strongest June on record in terms of transaction volumes, which hit 8,865, according to the index. This marks a 34.2 per cent and 38.8 per cent increase on a month-on-month and year-on-year basis, respectively.
The value of property sales in the emirate also rose by about 55 per cent to Dh22.7 billion in June, Dubai Land Department data showed. As of July 1, 70.8 per cent of the total sales volume of 2021 had been reached.
Government initiatives in the UAE, such as the expansion of the 10-year golden visa programme and new types of residence permits for retirees and remote workers, have contributed to property price increases in recent months, while the swift and effective Covid-19 vaccine campaign has made the country a safe haven for investors.
Dubai property prices have particularly risen sharply in the prime residential sector, which recently registered a record for the most expensive home in the city at Dh280 million.
Property Monitor said it expects prices to be stable in the second half of the year.
The Dubai property market’s resilience in the face of rapidly rising interest rates, inflation that seems to be on a runaway [cycle], and the strength of the dirham due to the US dollar peg, continues to wondrously amaze and battle any headwinds and downside risks thrown at it.
This phenomenon, while great for the market, cannot continue indefinitely and inevitably the music will begin to slow and the real estate market with it. We continue to predict gentle price growth viewed over the year as a whole, with the market most likely settling to a new cycle of broadly stable prices by the year end.
Month-on-month apartment prices across Dubai edged up 0.1 per cent while villa prices gained more than 1 per cent.