- 67% of people who have lived in the UAE for three or more years still rent rather than own
- 76% of people would like to buy but cite house prices are the main reason stopping them
- This is despite apartment sales going down by 3.6% from April 2014 – April 2015 and villa prices dropping by 3.7% over the same period
- Banks are trying to encourage UAE residents to buy property, offering mortgages with flat rates as low as 1.6%
- If you plan to stay for more than a few years, buying a property could save you money in the long run, says finance expert
The vast majority (67%) of us who have been living in the UAE for three years or more still opt to rent our properties rather than buy them, according to survey results released today by Compareit4me.com.
However, 76% of respondents said they would like to buy, but listed various factors, mainly house price, among the reasons stopping them. This is despite apartment sale prices in Dubai going down by 3.6% from April 2014 – April 2015, and villa prices dropping by 3.7% over the same period. The same survey found that 54% of residents are still opting for property rental over ownership because they are unsure as to how long they will remain in the region – yet a survey conducted by US executive recruitment company Stanton Chaset found that expatriate executives are now staying in the UAE twice as long as they were five years ago. Regardless of modest salary increases and improving economic conditions in the West, the average stay of senior professionals has increased to four and a half years. This is almost double the duration recorded back in 2007. Meanwhile, 36% of those taking part in the survey stated house prices as the reason they choose to rent over buying, with 12.4% giving the requirement of a 25% deposit when purchasing a property as the main factor stopping them from purchasing a property in the UAE.
However, despite concerns by expats that their stay will be short-term, not warranting the process of purchasing a property, UAE banks are actively trying to encourage more residents to buy property, both Emiratis and expatriates, by offering more home finance solutions and more competitive mortgage rates. Their actions are paying off, as according to Dubai Land Department, while property transactions as a whole decreased in 2014, the number of those bought with mortgages increased to 44%.
Banks including Mashreq, HSBC, Standard Chartered and Commercial Bank of Dubai are offering mortgages with flat rates as low as 1.6% and RAKBANK have gone one step further, recently announcing news of their partnership with Dubai Properties to provide convenient home finance solutions for a range of complete and off-plan properties. The properties are available in various areas, including popular residential locations like JBR, Executive Towers in Business Bay and Downtown’s Bay Square.
The survey conducted by compareit4me also found 49% of respondents consider rate to be the most important factor when applying for or considering a mortgage. With the banks making rates more appealing and accessible, the Dubai property sector should continue to gather growth momentum.
Jon Richards, CEO compareit4me.com, said: “The long term outlook for the real estate market in Dubai looks favourable for investors, particularly in the run up to the Dubai Expo. However, there’s every chance we could see prices going up and down before that, so it’s important longer-term investments are considered.”
He added: “The number of people staying beyond two years is increasing, so it’s worth residents doing the sums to calculate if home ownership would be more beneficial for them. For example, buying a villa in The Meadows, Dubai, costs around Dh6 million; over five years the cost of rent on the same property would amount to around Dh1,400,000, a lost chance on gaining any capital appreciation and paying into an asset that’s entirely yours.’’
With mortgage rates low and property prices down in the UAE, now is a great time for residents to get on to the ladder, says Jon.