UAE residents concerned savings will not match rising costs
Almost four in five UAE residents do not believe their current savings will meet future needs, a survey found.
Rising housing and utility costs have pushed residents into deeper debt, states the 2014 Savings Index from National Bonds Corporation.
According to 78 per cent and 64 per cent, respectively, of the respondents surveyed, a rise in house rents and utility bills have caused the most pressure on households. More than half the respondents said they had outstanding loans, and credit card use is on the rise.
“The 2014 savings index results are clearly indicative of negative market factors inhibiting segments of the UAE population from a healthy savings habit and achieving financial stability,” said Mohammed Al Ali, the chief executive of National Bonds.
The 2014 Index for the UAE found that the primary reason for saving was “financial stability”, followed by “children’s education” and “emergencies”.
When it came to remittances, the study found that 83 per cent of those sending money back home use exchange houses, while 43 per cent use banks. Of those that remit money back home, 39 per cent do so on a monthly basis.
Data from the study also showed that 40 per cent of credit card users in the UAE admitted to an increase in their credit card expenses over the past 12 months, a 6 per cent gain from last year. Only 2 per cent of credit card users claimed that they had not used their card in the past 12 months. The survey involved 1,877 respondents.
Price inflation in Dubai is rising at the quickest pace in five years, boosted by rising accommodation costs. The emirate’s inflation rate jumped to 4.2 per cent in September, up from August’s figure of 3.5 per cent. Countrywide, the inflation rate rose to 2.9 per cent. The Abu Dhabi figure was 3.7 per cent.
The effect of higher housing costs was felt even as the market got relief from the rent rises of recent years. Dubai house prices and rents weakened in the third quarter, said the Dubai-based property firm Asteco.
After 10 quarters of increases, average apartment rents fell 2 per cent during the three months to the end of September, while average villa rents dipped 3 per cent. Abu Dhabi apartment and villa rents were largely unchanged during the past quarter.
Increased rents are also a concern for savers in Kuwait, Qatar as well as the UAE, according to a separate study by National Bonds for the GCC region. Across the board in the GCC a higher cost of living and unexpected expenses were considered the most likely factors to affect savings plans in the current year.
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Published: December 10, 2014 04:00 AM