Property rents, house prices remain flat for three months
Housing prices in the UAE remain flat from September to November 2009, reflecting the fact that property rents and house prices have already bottomed out in June, Dubai Chamber said.
Housing and utility prices, which constitute the largest weight in the overall consumer price index (CPI) at 40 per cent, remained the same in those three months at 115.
Prices in that segment recorded the lowest monthly index level in May and June at 113 before it went up to 113.8 in July, data from Ministry of Economy (MoE) said.
Housing and utility prices in Dubai, accounting for the largest share of the emirate's CPI weight, also remained flat for the fourth consecutive month in November.
"This reflects the fact that property rents and house prices clearly witness a bottoming out in June. This clearly signals that the real estate and construction sectors are on the way to recovery," Dubai Chamber said in an economic note obtained by Emirates Business.
Price in the finished property segment has been stable and flat, Founder and Chief Executive of Leo Sterling Laura Martorano confirmed. But prices in the off-plan segment would have to take a further dive down.
"The market will surely recover in the next six months but then we have to be specific which market we are talking about," she said. "In general market it will do steady recovery. There should be more correction but that should happen in the off-plan market."
Overall, the UAE CPI stood at 113.97 in the first 11 months if 2009, 1.7 per cent up from the recorded 112.02 in the same period in 2008.
Food and non-alcoholic beverage prices, accounting for the second largest share of the CPI weight at 13.9 per cent, was the main factor behind the monthly rise, increasing by 0.7 per cent month-on-month in November 2009 compared to the previous month, the seventh consecutive monthly increase since last year.
The overall marked improvement in market sentiment throughout the country coupled with an easing in lending conditions pushed household furniture and equipment costs by 4.8 per cent on a monthly basis in November.
Based on MoE figures, consumer prices rose for the first time in 2009 in July. Dubai's consumer prices, however, began to rise only in October to 2.8 per cent on a year-on-year basis according to the Dubai Statistical Centre.
This was primarily on the back of a positive contribution of the food component of .24 per cent in that month.
Restaurants and hotels helped in pushing inflation higher in October as a record level of passenger flows into Dubai facilitated hotel and restaurant price inflation.
The UAE recorded its highest inflation rate in over 20 years at 12.3 per cent in 2008. This trend was reversed in the first half of 2009 due to a strong drop in rent of accommodation, commercial real estate and warehousing.
While the UAE is likely to register an overall inflation rate of 2.5 per cent according to the IMF, the recent pick up in housing and food costs suggests that the UAE could face the new prospect of continued inflation as signs of recovery continue.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.
Follow Emirates 24|7 on Google News.