Dubai has the least chance of a real estate bubble

Sao Paulo is popular with Milan and Warsaw. The survey said that despite a strong year, Dubai’s housing market remains fair. The survey connected high demand in Dubai’s housing market to rising oil prices and immigration levels last year.

Mid-2021 to mid-2022, housing expenses rose 10%. In the previous four quarters, rents have exceeded home value growth. The analysis says the market is adequately priced. The study said that for the second year in a row, family debt climbed faster than the long-term average. Due to low loan rates, home prices have outpaced salaries and rentals for a decade. The survey says cities in bubble-risk areas have had value rises of 60% in inflation-adjusted words during the past decade, although salaries and rents have risen by just 12%.

Since mid-2021, mortgage rates have roughly doubled in most areas. Combined with increased actual property expenses, a highly-skilled service worker may afford one-third less dwelling place than earlier the pandemic. According to says Claudio Saputelli, increment in assets prices losses due to market instability are reducing family spending power, which reduces demand for more living space. Housing is becoming less attractive as borrowing costs in many areas exceed buy-to-let returns.

The survey says that substantial employment is the last pillar supporting the owner-occupied home market in most areas. If finances deteriorate, so will this. A survey concluded Wednesday that Dubai’s property market is appropriately valued and has no bubble danger, whereas other top global cities have price bubbles. Toronto and Frankfurt’s property markets are out of sync with rising interest rates.

Climax in valuation

In the 25 cities evaluated, nominal house price rise averaged approximately 10% from mid-2021 to mid-2022, the most effective rate since 2007. All but Paris, Hong Kong, and Stockholm saw housing prices rise. As per report for the next year in a row, household debt climbed much faster than the long-term norm.

Rate hikes exacerbate the imbalance

Low borrowing rates have caused housing prices to outpace salaries and rentals for a decade. The survey found that cities in bubble-risk areas had price increases of 60% in inflation-adjusted terms, but real wages and rentals rose by just 12%.

Since mid-2021, mortgage rates have nearly doubled in all cities surveyed. With higher real estate prices, a competent service worker may afford one-third less living space than before the epidemic. This makes people less likely to want more living space. As borrowing rates rise in many cities, buy-to-let returns fall. This makes housing a less good investment.

Therefore, the (still) healthy labor market has become the final support pillar for the owner-occupied housing market in the majority of cities. As the state of the economy continues to deteriorate, there is a possibility that this, too, may fail. According to Matthias Holzhey, the lead author of the study at UBS Global Wealth Management, the following is the conclusion that he draws from the findings: “Indeed, we are witnessing the owner-occupied housing boom finally under pressure globally, and in the majority of the highly-valued cities, significant price corrections are to be expected in the coming quarters.”