Expatriate residents in the UAE increasingly want to own their home in the country, a new survey by Property Finder found.
The Dubai property advertising portal said that half of those who purchased in the past six months felt it was better than renting and one-third of survey respondents believe now is the right time to buy.
“The most common reasons were they felt it was a better financial decision to buy rather than rent and these potential buyers plan on staying in Dubai for more than three years,” Lynnette Abad, director of research and data at Property Finder, said.
Two of the biggest hurdles for would-be buyers are not enough affordable options on the market and the challenge of saving up for the down payment - around 30 per cent of the purchase price due to the government-mandated mortgage cap, which is higher than in other markets like London, New York or Hong Kong - Property Finder said.
Over the past four years, sales prices have fallen faster than rents, making homes more affordable and sometimes a better buy when compared to the cost of renting for residents planning to stay in the UAE for longer than three years.
Property prices across the UAE have fallen amid a three-year oil price slump, but as global oil prices have recovered to above $80 per barrel, market analysts say the bottom of the real estate drop could be in sight. However, rising supply in the run-up to Expo 2020 and a maturing market offering a broader range of price points has thus far perpetuated the down cycle.
Average residential sales prices in Dubai decreased by 7.7 per cent year-on-year in September, market analyst Reidin said in a report earlier this month. In Abu Dhabi, residential sale prices declined by 5.6 per cent year-on-year in the same period.
A rise in owner-occupiers - which means more expatriates buying their own homes, for example - would be beneficial to a maturing real estate market, Property Finder said, as it decreases the likelihood of frequent sell-offs and speculative investor behaviour. That is, home values are better maintained since investors are more prone to offer bigger discounts when they want to sell, rather than families who have made a lifetime investment in a home.
"Certainly, investors have their place in Dubai as yields are still some of the highest in the world, but the city would benefit from a more balanced ecosystem," Property Finder said.