In a remarkable turn of events, the United Arab Emirates (UAE) has emerged as the leader in global property price increases for the year 2023. A report from the International Monetary Fund (IMF) highlights this significant growth, showing the UAE at the top of the list with a 10.4% rise in property prices. This surge is not only noteworthy for its magnitude but also for outpacing other nations significantly.
The IMF’s findings, bolstered by data from the Bank for International Settlements, indicate that the UAE’s property market has experienced a 14.15% increase in prices since the period before the pandemic. This impressive growth places the UAE sixth in the world for property price hikes since pre-pandemic times.
Industry experts attribute this rapid growth to several factors. A major one is the influx of foreign workers and high-net-worth individuals into the country, which has intensified demand for properties. This demand is particularly strong for luxury and ultra-luxury units in prime locations, resulting in record-high prices for villas and penthouses.
Another contributing factor is the disparity between the supply of residential properties and the population growth. In 2023, approximately 50,000 new housing units were introduced, which falls short of the needs of the country’s rapidly growing population, estimated at 100,000 new residents in the same year. This imbalance has led to an undersupply in the market, particularly in the luxury segment.
Dubai, a major city in the UAE, witnessed a significant milestone in November 2023 when per-square-foot prices reached Dh1,271, surpassing the previous high recorded in September 2014, as reported by Property Monitor.
The IMF’s report also sheds light on the broader global context. Home prices in advanced economies, including many European Union countries, Africa, and the Middle East, are now 10% to 25% higher than before the pandemic. Rising interest rates, which directly affect mortgage markets, are making it harder for people to afford homes. The scarcity of housing in certain areas further complicates the situation, resulting in stretched affordability amidst high home prices and increasing interest rates.
The first half of 2023 saw mortgage rates in advanced economies rise by over 2 percentage points compared to the previous year. This hike has led to a noticeable decline in real house prices in countries like Australia, Canada, and New Zealand. These countries have a high proportion of adjustable-rate mortgages and had already experienced inflated home prices before the pandemic. While some advanced economies have seen home prices drop by more than 15%, the decrease in emerging economies has been less dramatic. However, overall, real house prices are expected to continue cooling down from the highs of 2021 and 2022 to return to pre-pandemic levels.
Also Read:
See how Sharjah revitalizes an ancient town that is 400 years old.
