Setting the mortgage lending limit at a rate of 70 to 75 per cent for expats and 75 to 80 per cent for Emiratis would be ideal for the real estate market and the economy, the study by Geopolicity suggests.

This range would greatly minimise the possible GDP losses and overall economic impact that could result from the Central Bank’s proposed cap, it said.

Authorities should consider adopting other measures alongside these relaxed caps, which could provide the “right signals to investors without affecting growth,” the study noted.

The Geopolicity report suggests a number of measures that the government can adopt for sustainable growth:

-Duty/penalty on properties resold within 24 months of initial purchase

-Strict income assessment measures to prevent mortgage defaults

-Fixed rate mortgages rather than adjustable rate ones

-Secondary market development to increase liquidity

- More transparency in mortgage regulations and lending

-Higher financial literacy and awareness among lenders and buyers

-Increased competitiveness and better regulated market for mortgage lenders