An overall decline of 41% is recorded in the Dubai House Price Index for quarter one from global real estate consultancy Colliers International.
The index, compiled using mortgage transaction data from financial institutions accounting for 60% of the mortgage market in Dubai, also demonstrates a 34% year-on-year decline between Q1 2008 and Q1 2009.
At the end of Q1 2009 property prices in the Emirate had returned to approximately the same level as those recorded in Q2 2007, it says.
The decline is attributed to the convergence of a number of interrelated and overlapping factors including the availability of finance, expatriate job security concerns and transparency about delays and postponements, the report adds.
Colliers' analysis also highlights a key change in the market as professional investors, focused on the yield generated by a property, became the primary purchaser type as end-users and speculators fell away from the market.
'Negative sentiment is the key factor driving the decline in the Index and the availability of finance continues to impact the market. End-users are concerned about job security and therefore unwilling to enter the market, even if finance is available to them, while the price/yield gap is tempting professional investors to wait for further declines,' said John Davis, Chief Executive Officer of Colliers International.
On a more positive note the Index remained unchanged in March 2009 but Colliers warned against reading too much into it. 'It is too early to say whether the halt in the decline of the Index can be sustained, especially over the traditionally quieter summer months. We expect the last quarter of 2009 to be a barometer signalling future trends in the market,' added Davis.
The House Price Index also shows that completed properties fell 31% and properties under construction fell 56%. Apartment prices decreased by 42% in Q1 2009 compared to Q4 2008 and villa prices decreased by 40%.