According to a survey taken by ArabianBusiness.com, most of the residents within the Persian Gulf will be ignoring mortgage offers from banks within their area in favour of continuing to rent the properties that they live in.
According to the survey, 43% of respondents said that they would continue to rent their properties, while 37% said that they would buy with 20% undecided at the time the survey was taken.
These survey results are in spite of skyrocketing rent prices that have increased as much as 10% in a single year in certain high demand places along the gulf such as Dubai. The rent prices have gotten so out of control in some cases (such as in Dubai) that the government has reduced their cap on rent increase in order to try and compensate for the swelling prices.
With the high rental prices only looking to increase as time goes on, what is driving people to continue renting rather than buying? According to most, it is the belief that the housing prices will reach their peak this year and then start to go down.
Some analysts, such as EFG-Hermes (an Egyptian investment bank), have said that the creation of 120,000 new dwelling units between now and 2009 would cause the market to swing in favour of buyers by the end of the 2008 year. Their lead analysts have predicted an overall decline of between 15-20% in housing values over the next three years in places like the UAE where housing booms have been going on for a few years now because of high demand and low supply. Other states, such as Kuwait, that have not had housing booms are likely to see different results.
The majority of the 37% of respondents who were looking to buy said that they were going to buy in areas where high prices due to demand would continue on through 2009.
