Monday August 3 2009

The fall in Dubai house prices slowed to 9 percent in the second quarter of 2009 from the first three months of the year amid concerns over job security, financing, project delays and cancellations, but are nearing the bottom after falling almost 50 percent since their peak late last year, U.K.-based real estate consultancy Colliers International said on Monday.

Year-on-year prices fell 48 percent since the second quarter of 2008 and are down 50 percent from their peak in the third quarter of 2008, Colliers said in its quarterly price index, which collates mortgage transactions on properties open to foreign ownership since the start of 2007.

"The decline ... is due to a number of interrelated factors," the report said. "The availability of finance, expatriate job security concerns and transparency about delays and postponements have continued to hamper the market's recovery."

The average price of property fell to 949 dirhams ($258) per square foot in the second quarter of 2009, compared with 1037 dirhams in the first three months of the year, the report said, and are "currently at 2Q 2007 levels".

However, the rate of decline during the quarter "decelerated dramatically" from 42 percent between the fourth quarter of 2008 and the first three months of 2009, Colliers said.

"After a significant decline in the first three months of the year, the market witnessed a deceleration in the rate of decline in residential prices in the second quarter," said Ian Albert, regional director of Colliers International in Dubai.

"The magnitude of the decline that occurred in 1Q 2009 was not, and is now very unlikely to be repeated."

Villas and townhouses were hardest hit during the second quarter, with prices falling 18 percent and 11 percent respectively. Apartment prices, meanwhile, dipped 3 percent.

Property prices were rising sharply as recently as the first half of 2008. But in recent months, as the impact of the global crisis draws in on the emirate, real-estate agents have reported softening prices and a lack of buyers, especially property speculators that helped drive steep price increases.

Prices rose 42 percent in the first quarter of 2008, 16 percent in the second quarter and 5 percent in the third quarter, according to previous Colliers reports.

"In the coming months the market will be searching for further evidence of market stabilisation as we draw nearer to the bottom of market prices," said Albert said, adding that third-quarter figures will be distorted by the summer holidays and Ramadan.

Source: Maktoob