Dubai property prices fell in April as a property index in the emirate turned negative for the first time in four years
The residential prices index started declining from the second quarter of last year – in line with the plunge in oil prices and declining gold prices, according to Reidin, a property information company.
The index dropped about 3 per cent in April from the same period last year, Reidin said.
Apartment sales prices dipped 0.87 per cent in April from March and declined 3.6 per cent from a year ago.
Villa sales prices fell 1.84 per cent month on month, but edged up 0.4 per cent year on year.
Although apartment rents dived 0.69 per cent month on month, villa rents dropped just 0.25 per cent month on month.
A supply of 2,000 new apartments and villas is expected to pressure sales and rents, according to a report last month from MPM Properties, the real estate consultancy unit of Abu Dhabi Islamic Bank.
The property influx will expand the supply of residential villas and apartments to 471,000 in the first quarter next year, and 19,400 units are expected to add to the supply for the rest of the year.
Following a surge in property sale prices in 2013 and last year, Dubai’s residential market is maturing after the introduction of the federal mortgage cap and the doubling of property registration fees.
“These regulations have slowed the rate of growth, bringing prices and rents to more sustainable levels,” said Richard Paul, head of residential valuations at Cluttons.
“The fall in oil prices since the middle of last year has also created some uncertainty and is now beginning to be priced into the market.
“An upward creep in completions has added to the level of supply.”
The values for villas and apartments are expected to weaken for the rest of the year as buyers wait for the market to reach its trough.
Although rental demand remains healthy, there is growing choice because new developments will be released across the emirate.
“We foresee the rental market to be stable for the next 12 months in both villas and apartments,” said Mr Paul.
In Abu Dhabi, apartment prices fell 1 per cent in April from March, while villa prices dropped 1.2 per cent.
Still, rent values rose 1.82 per cent in April from March.
Follow The National’s Business section on Twitter