Dubai: Buying a house with cash is a long shot for most people, especially for low-income earners who have to constantly struggle with the rising cost of living. A lot of home buyers find themselves borrowing money from lenders to be able to finance a house purchase.

However, some individuals prefer cash payment over bank financing because they think it helps them save a lot on mortgage interest and other banking fees. And it seems the trend of buying a house outright is becoming more common in Dubai or UAE.

According to a new survey, more than half of Emiratis (54 per cent) who want to own a new flat or villa prefer cash or cheque payment when buying a piece of property in the UAE.

In comparison, only a small proportion of non-Emirati buyers, including Westerners (27 per cent), Arab expats (37 per cent) and Asians (39 per cent) can produce cash or cheque outright for a property payment.

Analysts said this only shows that investors still have so much confidence in the UAE’s property market.

“The study highlights continued confidence in the local real estate market with three-quarters of first time buyers preferring to purchase properties in the UAE,” said Kailash Nagdev, UAE managing director for YouGov, who conducted the study.

Ivana Stanisic, residential consultant at Better homes JBR branch said that unlike Emiratis, a high number of foreign buyers make their first property purchase in the UAE through financing.

"[Buyers who prefer cash payment do so] to avoid the interest from a mortgage and other banking fees as the intention is generally to keep the property for the longer term. However, with property investments that involve larger volumes, a mortage is more common," Stanisic told Gulf News.

Property buyers, however, have been advised against spending all their savings on a house purchase as they could be missing out on other investments that could offer them higher returns. Investors who can afford to pay the cost of a property need to ensure they have enough money left that can support them during emergencies or when they lose their job.

Andrew Prince, financial planner at deVere Acuma, said that there are financial benefits to gain from using leverage to finance the purchase of a property.

"A serious investor will know that greater returns are available from leveraging and also owning multiple rented properties helps with diversification. If one unit is empty, the income from the others helps offset the finance cost," said Prince.

"If we used London between 2003 and 2013 as an example, the annualised profit from a leveraged property is almost three times that of a property purchased in cash (11 per cent per annum versus 4.1 per cent)."

"There can be tax benefits particularly for expats to leverage including financial planning opportunities to mitigate Inheritance Tax. Not so much an issue for an Emirati unless they wish to have a greater choice in succession planning."

YouGov's survey also found that most of the investors who cash in on the UAE’s realty boom are mature individuals, saying that about eight in ten (85 per cent) of property owners are “more likely to be” over 50 years old.

There is also more emphasis on the location, with 51 per cent of the 308 respondents saying properties near retail shopping malls are the most attractive and in demand, followed by those close to the beaches, public parks and mosques.

Ameen Al Qudsi, CEO of Nationwide Middle East Properties, said there is still a growing demand for property in the UAE, thanks to the quality of products delivered by developers and the payment plans offered to investors.

He said the real estate regulations implemented by the government, particularly in Abu Dhabi, have also restored confidence in the real estate market over the last few years.

“Removing the five per cent cap on rental increases has raised the income and return on investment for individuals who choose to buy, making it a more favourable option than renting,” he said.

A number of properties are set to be showcased during the ninth edition of the Cityscape in Abu Dhabi next week. Around 130 exhibitors from the UAE and around the world are expected to participate in the event that will run from April 21 to 23.