Industry executives say that prices have increased by double-digit rates in the past two years due to the influx of foreign workers into the country
Property prices in the UAE have recorded the highest increase among all the countries in 2023, according to the International Monetary Fund (IMF).
The Fund also noted that the UAE is among the top 10 countries where property prices have seen the largest increase since the pre-pandemic level.
Industry executives say that prices have increased by double-digit rates in the past two years due to the influx of foreign workers into the country as well as high demand from high net-worth individuals, pushing prices to record highs.
In addition, residential property market supply has been lagging behind population growth last year with nearly 50,000 units coming online as compared to the emirate’s population growing by 100,000 in 2023 alone. This resulted in an undersupply of luxury and ultra-luxury units in prime locations, pushing prices to record highs for villas and penthouses in the country.
In November 2023, per-square-foot prices in Dubai hit a record high of Dh1,271, surpassing the previous all-time high of September 2014, according to the Property Monitor.
Source: IMF
IMF said home prices in advanced economies, including most European Union countries, as well as Africa and the Middle East are 10 per cent to 25 per cent higher than pre-pandemic levels.
“Rising interest rates have passed swiftly to residential mortgage markets, impeding affordability for current and prospective home buyers. Additionally, scarce home supply is limiting purchases in some regions. In all, housing affordability is more stretched amid still-elevated home prices and higher interest rates,” the IMF said in its latest update on the real estate market.
In the first half of 2023, mortgage rates in advanced economies climbed by more than 2 percentage points compared to the previous year. During this period, countries like Australia, Canada and New Zealand witnessed substantial declines in real house prices, likely due to a high share of adjustable-rate mortgages and home prices that have been stretched since before the pandemic. Comparatively, home prices have fallen more than 15 per cent in some advanced economies while the drop in emerging economies was less significant. But, on the net, real house prices will need to keep cooling from the 2021 and 2022 highs to reach pre-pandemic levels.
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