Apartment and villa prices in Dubai fell in July amid growing concern in the real estate industry that the property market is showing few signs of recovery.
The latest figures from the REIDN Sales Price index which tracks price fluctuations in the residential real estate market shows an overall average decrease of 0.85%. But villa prices fell 1.19% and apartment prices were down 2.25%, compared with June.
The one piece of good news is that the price falls seem to be slowing and the July 2010 data is slightly up in comparison with July 2009 prices. The index shows a year on year rise of 1.33%.
In quarterly terms the index is down 0.84% from the second quarter of 2009. Apartment prices fell 5.23% in the second quarter of the year and villas increased 6.99%.
The index also shows that prices are varying considerably depending on the size of the property. Sales prices were down in the categories of 50 square meters or less, 51 to 100 square meters, 101 to 150 square meters and 151 square meters and more.
Prices in the 50 square meters or less category saw the steepest drop against all other apartment size categories year on year, with a 10.98% decrease from July 2009 prices and a 1.99% decline from June 2010 figures. Apartments in the 101 to 150 square meter category held their price best, only decreasing 0.99% year on year.
Reidin.com’s index is compiled in partnership with Dubai’s Real Estate Regulatory Authority (RERA) and is regarded as one of the best benchmark of what is happening with prices in the emirate as the firm gathers data from a number of sources including transactions for certain districts and communities in Dubai.
So it is a blow that it is still showing that prices are falling and Dubai is not the only market in the Gulf region where a recovery is yet to begin. The latest report from the National Bank of Kuwait shows that July saw the largest decline in sales for five months.
Sales fell 42% with only 415 property transactions registered at the Ministry of Justice during the month. It is a worrying trend after more stable sales figures.
‘The dip was driven by an unusually large seasonal effect, with activity falling away as the summer travel season began. The timing of the travel season might have shifted this year, with Kuwaitis holidaying earlier than usual in order to return before Ramadan,’ the report says.
It predicts sales should bounce back but analysts detect a worrying trend. ‘Sales activity should eventually bounce back, once the traditionally slow Ramadan period is over,’ the report says.
But some are concerned that there could be a drop ion confidence with fewer apartments and villas being sold, although sales are still better than a year ago.
Sales in the commercial and investment real estate sectors were also down, the report shows.
Investment sales fell 53% and there were five commercial sales. ‘In general, consumer confidence remains solid and lending conditions are more or less unchanged, suggesting little justification for a relapse in home sales,’ it added.