Dubai's housing market has been on a roller coaster ride for the past two decades and is highly correlated with rising oil prices. As oil prices have risen, home prices have also risen 10% between mid-2021 and mid-2022. The post-pandemic economic recovery and rising immigration have supported this momentum. Rents have even outpaced home price growth over the past four quarters.
After seven years of falling home prices, Dubai's real estate market recovered to a nominal 10% price increase between mid-2021 and mid-2022. The growth was even stronger in the primary market. Now, however, the market has only returned to its 2019 price level and is still 25% below its 2014 peak. The Dubai housing market is in fair value territory.
The post-pandemic economic recovery and rising oil prices accelerated the recovery. Disposable income growth turned positive for the first time since the pandemic began.
Going forward, the market is likely to benefit from a new visa program with more lenient residency requirements for skilled professionals and new rules that increase transaction transparency. Dubai is already attracting more skilled and wealthy migrants from other regions, where the investment climate has become less favorable. This influx has impacted both the prime owner-occupied housing market and the rental market. Rents bottomed out last year and are up 22 percent since mid-2021. Once these new renters settle in, they will eventually become potential buyers.
Home price growth is likely to remain high in the coming quarters, but the rate of growth will gradually decline amid higher financing costs. In the long term, given the current oversupply and new construction continuing to outpace population growth, real estate market growth in Dubai is likely to remain volatile.
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