Despite apartment and villa sale prices dropping steadily for 2 years, a recent survey found that just 30 per cent of its UAE residents have bought property here, meaning a sizeable 70 per cent of them are still renting, even though half have resided here for five years or more.
This is contrary to more developed and established parts of the world such as the UK, specifically England and Wales, where the figures are the exact opposite, with 64 per cent owning and only 36 per cent renting.
With an increasing number of expats staying longer in the UAE, and with rental yields across the country ranging from 6 per cent to 10 per cent for apartments, most people understand the cost of renting for 3 to 5 years could easily cover the deposit.
However, according to the survey, conducted by propertyfinder, 70 per cent still rent. The survey factored in responses from 11,000 people across nationality, gender and household income, or about 15 per cent of propertyfinder's UAE database.
The main reason cited for renting as opposed to purchasing homes was affordability concerns. With a combined 69 per cent answering that prices were too high, they couldn’t raise the necessary deposit or they were unable to qualify for the loan amount required to borrow.
The number of people staying in the country longer than planned is increasing. 54 per cent ended staying longer than expected and property enquiries on the propertyfinder.ae are the highest they have been since 2014.
“It is clear that the want is there, but the high deposit requirements, the fees, the mortgage cap and stringent lending policies, are what’s stopping the market from maturing like its Western counterparts, and if we can overcome these points – I can really see a bright future for the UAE property transaction market,” says Lukman Hajje, propertyfinder Group CCO explains.
Introduced in January 2014, the mortgage cap stipulates that expats must put down a minimum of a 25 per cent deposit for properties under Dh5 million and 35 per cent above Dh5 million plus the doubling of the Dubai Land Department transfer fees to 4 per cent have no doubt helped avoid another crash of the sort seen in 2009, when prices fell by 50 per cent to 60 per cent. However, Hajje and his peers believe that today in a market that has been cooling for 2 years, it remains the single biggest obstacle for those hoping to get into the market.
