Lending cap has stalled Dubai property purchases
Proposal to cap mortgages to 50 percent of the home value has inevitably unsettled the market according to Dubai real estate agents.
The recent proposal to cap mortgages to 50 percent of the home value has inevitably unsettled the market according to Dubai real estate agents.
A proposal sent to UAE banks by the country’s central bank would see expat buyers only allowed to borrow 50 per cent of a property’s value and UAE nationals restricted to 70 per cent. The move is designed to combat speculative buying which has fuelled high inflation of house prices in the past. But it has engendered a negative effect: “People that were going to purchase are now holding back and waiting to see what is going to happen,” said Ryan Mahoney, CEO of Dubai-based estate agent Better Homes.
Renan Bourdeau, managing director of propertyfinder.ae, agrees: “A deposit of 20% to 30% would be appropriate for the UAE and in line with European standards,” he said. But while many budding buyers risk seeing their dream of UAE home ownership collapse, Mahoney said many can still relax – 50 per cent of his clients buy their home with cash.
Potential home buyers have told Big Project ME that they are unwilling to invest in a market that has no built in stability and where dramatic legislation can be introduced at random.
