Dubai: While 2009 has been dubbed the year of the end-user in Dubai, some experts say the main issue for buyers will be whether they can buy or whether they want to buy.

House prices in Dubai have dropped eight per cent between October and December, according to the fourth quarter House Price Index (HPI) 2008 issued by Colliers.

The price drop relates to freehold residential properties, including apartments, townhouses and villas.

However, despite this drop, the HPI also shows a year-on-year price growth of 59 per cent between quarter four 2007 and quarter four 2008.

This means the average price level in Dubai is now similar to what it was back in the second quarter of 2008.

Ian Albert, regional manager at Colliers, said the need for low-cost housing for both renting and buying has been apparent for some time.

"It's been important for a while. When people were paying 40 to 50 per cent of their salaries on rent it made life hard. They were hoping the payrises would supplement this. But with the global economy and the freeze on salaries and job security, affordable housing has become a [greater] element," Albert said.

The impact on the real estate sector was more keenly felt in the fourth quarter, with many banks and lending institutions tightening their lending and reducing loan to value ratios.

The index showed that there was a five per cent drop in price for completed properties, including the Burj Dubai.

There was a 1.6 per cent drop in price for completed properties, excluding the Burj Dubai development.

The end of 2008 also saw the decline of major currencies and made dirham-denominated assets more expensive, thus discouraging international investors.

The main issue with Dubai's property market previously was that it had been growing at such a speed due to excessive speculation that it simply wasn't sustainable.

However, the issue now is much different.

With negative market sentiment and a lack of confidence still coursing through Dubai's property industry, many who do have the money are too nervous to buy and are waiting for further drop in prices.

Perhaps the most telling sign is that the volume of transactions dropped 45 per cent in just three months, between quarter three 2008 and quarter four.