A vast majority of UAE residents prefer to rent rather than own their home mostly due to affordability concerns in spite of a steady drop in prices, according to a new survey.
Only 30 per cent of residents in the UAE have bought property here, "meaning a sizeable 70 per cent of them are still renting, even though half have resided here for five years or more," propertyfinder.ae's survey has revealed.
This trend is contrary to more developed and established parts of the world such as the UK, specifically England and Wales, where the figures are the exact opposite, with 64 per cent owning and only 36 per cent renting.
"Year on year, we are seeing expats staying longer in the UAE, and with rental yields across the emirate ranging from six per cent to 10 per cent for apartments, most people understand the cost of renting for three to five years could easily cover the deposit. Yet, 70 per cent of our audience still rent," propertyfinder.ae said.
"The main reason cited by the renting community for being opposed to purchasing homes was affordability concerns. With a combined 69 per cent answering that prices were too high, they couldn't raise the necessary deposit or they were unable to qualify for the loan amount required to borrow," said the survey report.
It noted that the number of people staying in the country longer than planned is increasing. Around 54 per cent ended staying longer than expected and property enquiries on propertyfinder.ae are the highest they have been since 2014.
"It is clear that the want is there, but the high deposit requirements, the fees, the mortgage cap and stringent lending policies, are what's stopping the market from maturing like its Western counterparts. If we can overcome these points, I can see a bright future for the UAE property transaction market," said Lukman Hajje, propertyfinder.ae Group CCO.
The UAE property prices are considerably cheaper than in other leading cities in the world and have come down considerably since the peak of the last cycle back in mid 2014.
The report said mortgage cap regulations, which stipulate expats needing a minimum of a 25 per cent deposit for properties under Dh5 million and 35 per cent above Dh5 million, plus the doubling of the Dubai Land Department transfer fees to four per cent helped avoid another 2009 type of crash where prices fell by 50 per cent to 60 per cent. However, they remain the single biggest obstacle for those hoping to get into a market that has been cooling for two years, said the report.
"Even off-plan purchasers being lured by attractive 'book with just 10 per cent' adverts quickly learn that the UAE lending policy stipulates a maximum lend of 50 per cent on off-plan properties," said the report.
Hajje said the recent Brexit news would mean that British expats will be even further enticed to stay put here in the UAE and would attract further of their fellow countrymen to the emirates over the next five years to avoid the turmoil that many feel they will be subjected to.
By Isaac John
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