UAE home sales on the rise: When is it a good time to buy real estate next?
Property sellers have been capitalising on a surge in property transactions in the UAE
Dubai: After surging rental demand caused property prices to record levels currently, UAE-based property brokers are evaluating how the real estate price rally is making way for what is known as a ‘seller’s market’. You can take advantage of this trend reversal too. Here’s how..
“Property sellers have now started to capitalise on a surge in property transactions and escalating prices driven by heightened buyer demand,” said Stephanie Myrtle, vice president of a Dubai-based real estate research firm.
“So with property deals and prices rising on the back of higher demand from buyers, it clearly indicates a ‘sellers' market’ in the UAE right now. What this means is with a spike seen in buyer demand, sellers will able to profit selling their properties now. But will this trend last? Not for long.”
A buyer's market, on the other hand, occurs when there is a surplus in housing or more homes for sale than buyers. A balanced market happens when there is the same number of homes for sale as there are buyers.
What does this mean for property buyers?
Here’s another indicator proving it’s a seller’s market: Surveys conducted this year indicate that while buyers registering their interest with UAE-based real estate brokers have been on the rise, property listings by sellers on retail platforms have not risen as much. So how can buyers benefit?
“With a cooling-off period expected this year as headwinds from high-interest rates prevail and new units come onto the market, the anticipated increase in supply, comprising 41,500 apartments and 18,500 villas in 2024, should help to stabilise residential real estate prices this year,” added Myrtle.
“While the above figures and an increasing number of surveys among home buyers reflect a rising appetite for properties amid a limited supply, contributing to a sellers’ market, with property prices eventually steadying later this year, buyers will stand to benefit.”
How do sellers benefit from a sellers’ market?
When Prakash Bhat, a real estate and mortgage consultant based out of Abu Dhabi, was asked how sellers can use this market shift to make their properties more marketable and improve their chances of a successful sale, he said sellers aware of this shift can then price the property better.
“This is crucial to attract potential buyers. While it is common for sellers to think they can list their property at a high price and reduce later if they don’t get the expected offers, buyers have many options in a seller’s market,” Bhat added.
“With real estate market prices stabilising, sellers can lose out on good offers if the buyers view the price reduction negatively. However, buyers with knowledge of a rebounding market can use this information to their financial advantage.”
Looming interest rate cuts can help home buyers
Interest rate hikes worldwide have led to higher cost of borrowing, with mortgage rates less attractive for new home buyers. However, with rate cuts looming by the end of this year, analysts see mortgage rates dropping at some point in 2024.
For now, anyone wanting to take out a mortgage should opt for a variable rate loan, at least in the initial year or two. “Unless something drastic happens to the global economy, the immediate future will all be about steady decline in interest rates, benefitting buyers,” said Bhat.
(What is a variable interest loan? As opposed to a fixed interest rate, which as the name suggests – rates stay the same, a variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest rates change.)
Verdict: While home sellers can profit now, buyers needn’t be sad for long
If you are looking to sell property right now, experts continue to recommend that it is still an ideal time to do so. But prospective home buyers needn’t be disappointed for long with interest rates dropping in the near term, and real estate prices stabilising soon from their current highs.
In the meantime, potential property buyers can benefit from staying up-to-date about market conditions and buyer preferences, both through your own due diligence and through your broker, advised Bhat.
“Regularly monitor the market trends, city-wise developments, and other factors that may affect property sales. This knowledge will help you make informed decisions and adapt your buying strategy as needed.”