Property Prices Need To Fall To Mid-Income

Mortgages will become much easier to obtain in Dubai when property prices fall to mid-income levels, a panel of financial experts said Wednesday. Unsurprisingly, there have been far fewer applications from potential buyers for mortgages in recent weeks and months. Property prices are now falling across Dubai, opening up channels of hope for those who had previously been outpriced, but heavy mortgage requirements and hefty deposits are keeping them at arm's length. Dubai will be a better place to live once families can afford to rent or buy, which I think will happen. Mortgages will come back when real estate assets align with the medium income of the country," Barmak Besharaty, managing director, Almas Capital, said during a Cityscape networking forum yesterday.

Until a few months ago, property in Dubai was only targeted at the wealthy. Real estate asset prices had gone up astronomically compared with incomes. A lot of developers were offering a luxury lifestyle that was out of reach of the majority of the population. So is lending an issue? Yes," Besharaty said. Developers were pushing up prices of their properties in line with market forces and speculators were flipping their units to try and make money. Greed brought the whole system down," Sohail Zubairi, chief executive of Dar Al Sharia Legal and Financial Consultancy, said. To get a decent mortgage in Dubai now, it helps if you are free from car loans and personal loans, have at least Dh300,000 waiting in a bank account as a handy deposit and, ideally, you'd be on a huge salary. However, the average mid-income person has at least one loan, usually for a car, and possibly does not have hundreds of thousands of dirhams floating about in their bank account. The current rates being offered are not attractive to prospective buyers.