Housing market condition is stabilising — Colliers

Dubai: House prices are getting closer to their underlying values, indicating that the market is beginning to stabilise, according to Colliers International.

The latest house price index for fourth quarter 2009 shows that prices remained stable during the fourth quarter of 2009 rising by only one per cent which put it at the same levels as second quarter 2007.

"What we're seeing is a constant variance within the property types; apartments, villas or town houses over the quarters in terms of demand levels and prices.

"But during the course of the year, the fluctuation period is much more narrow. In one year, there's been only a 1.7 per cent variance in the index. Yes there have been ups and downs but there are strong indications that were reaching that bottom point. I think quarter on quarter we will see small variances within prices as the market attempts to achieve a sense of equilibrium," Ian Albert, regional director of Colliers International, said.

In previous quarters, prices in the index rose seven per cent in the third quarter, declined by nine per cent in the second quarter and by 41 per cent in the first quarter.

The report states that apartment prices have decreased by four per cent in fourth quarter 2009 compared to third quarter 2009, villa prices have increased by seven per cent in fourth quarter 2009 compared to the third quarter, and townhouse prices have increased by 10 per cent in fourth quarter 2009 compared to the third quarter.

Researched

The real estate consultancy firm compiled the Dubai House Price Index by using mortgage transaction data from five different financial institutions. "We don't base our reports on figures released by brokers or by the land department which can sometimes be historic.

"The report's data is based on the number of mortgages bought and how many properties were bought. The data doesn't include cash purchasers which can sometimes lead to misleading results."

According to Albert, the future of the realty market hinges on several of variables. "We have a number of things happening in 2010 that we haven't witnessed before.

Dealing with issues

"We have to settle the Dubai debt issue which can cast a cloud and have a negative impact on the market or can reinforce the market depending on how it is settled.

"We have the issue of how banks are going to report their end of year results which will impact liquidity... This is the first full year that banks and private sector companies have had a year of decline, fully facing the global crisis. And finally, we have a lot of supply coming online it will definitely have an impact on prices."

On Monday, Shuaa Capital predicted the Dubai residential market will decline by another 10 per cent in 2010, with an additional 26,650 units due to be released into the market.

Asteco's report the same day showed an improved economic position and more readily available mortgages have contributed to a more positive future for the real estate market with prices stabilising in the last quarter of 2009.