Dubai house prices fall but remains prime global city

House prices in Dubai slipped by 3.7 per cent in the first quarter 2015 compared with the fourth quarter 2014, according to a new report.

The Global House Price index of Knight Frank revealed a 6.1 per cent decline over the past 12 months, putting the emirate at 53rd position in the list of 56 countries.

However, the consultancy's Prime Global Cities Index, which tracks the performance of luxury residential prices, with Dubai being listed among the cities that have outperformed the index since 2009.

Dubai-based Phidar Advisory said in its new report that property prices and rentals had declined during the six weeks of second quarter 2015, but the ongoing erosion of sale prices was a healthy correction.

JLL, a global real estate consultancy, has also said Dubai is expected to consolidate its position as the top city for corporate occupiers in the Middle East and North Africa region over the next three years.

Knight Frank said the house price index recorded its weakest annual growth for three years, rising mere 0.3 per cent in the year to March 2015.

Weighted by a country's GDP, the index ensures countries such as China and the US have a greater influence than much smaller economies such as Jersey and Malta.

Although Japan, France and China are experiencing a housing market slowdown, overall the market is more sustainable growth amongst a larger number of countries.

Around 75 per cent of countries tracked by the index recorded flat or positive annual price growth in Q1 2015, the report said, adding three years earlier the figure stood at 47.2 per cent.

Hong Kong topped the annual rankings with mainstream prices ending the year nearly 19 per cent higher in March. Russia and the CIS represent the index's weakest-performing world region with prices down 2.3 per cent year-on-year

Seven of the top ten countries ranked by annual house price growth are now in Europe with Turkey, Ireland, Luxemburg and Estonia ranking among the top countries, all registering double-digit annual growth.

The two bellwethers of global housing economics, China and the US, are pursuing divergent courses. While prices continue to soften in China (down 6.4 per cent on average year-on-year) the volume of sales rose 7 per cent year-on-year in April on the back of looser monetary policy.

The US, on the other hand, recorded 4.1 per cent growth in the year to March but with underlying inflation still rising a rate rise is expected later this year, the report said.

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