Dubai housing market outlook dims on increase in borrowing costs

Dubai housing market outlook dims on increase in borrowing costs

BENGALURU - Property prices in Dubai will rise this year and next at a slower pace than previously thought as higher mortgage rates and the cost of living crisis will reduce foreign demand, a Reuters poll of property market analysts suggested.

With an economic rebound propelled by higher energy prices, Dubai's property market recovered strongly from 2020's severe downturn with buyers snapping up luxury units after the emirate eased pandemic restrictions faster than most cities around the world.

But most property market analysts in a Reuters poll said the recovery was fragile and uneven, and an oversupply of residential properties along with rising interest rates would pressure prices over the coming months.

Home price rises were forecast to slow to 6.5% in 2022 and 3.0% in 2023, down slightly from 7.5% and 4.5% in a May poll, respectively, according to the median forecast of 10 property analysts polled on Aug. 15-Sep. 2.

That outlook stands in stark contrast with other world property markets including Canada, Australia and New Zealand where house prices were expected to fall this year and next.

"Demand for residential properties has reached an all-time high this year, but this trend could change due to the rising cost of living, increasing mortgage