In Dubai, real estate buyers are learning to live without mortgages, as more and more developers offer convenient direct monthly payment plans for the off-plan housing units.
The latest data from the Dubai Land Department (DLD) confirms that the share of real estate sales using bank lending was still 62 per cent in the first six months of the year, but this is already much less than last year. Then, in the first half of 2018, mortgage transactions accounted for the vast majority of 81 per cent of the total real estate sales.
Obviously, more and more property buyers want to avoid paperwork obligatory when someone is trying to secure bank lending for their property purchase.
In addition, mortgage rates over the past 12 months soared to new heights, which also pushes potential buyers to a deeper analysis of alternative
And for the second year the rate is already 4 to 5 per cent. But interest rates on housing loans are expected to decline slightly if the US Federal Reserve lowers the base rate by 0.25 per cent at the end of this month, as awaited.
During the first half of this year, 4,073 mortgage transactions were registered in Dubai, which is 26.5 per cent less than in the first half of 2017 (5,396 transactions) and significantly less than in the same period last year (5,539 transactions ).
For developers, generous post-handover payment plan offers turned out to be a winning strategy to attract buyers, at least for now, experts say.
“The decline in mortgage sales from 81 per cent to 62 per cent was recorded mainly in
"But if we also take into account property sales in the off-plan sector, we’ll see that the percentage of sales transactions using post-handover payment schemes directly from the developer will amount to more than 50 percent of the total number of deals closed in the Dubai property market in H1 2019."
In other words, the share of mortgage sales in the off-plan sector has also reduced significantly. Buyers show enthusiasm with responding to the new payment mechanism offered by developers. As the result, the average housing cost is also decreasing, thus overall property price reduction is not limited to exceptional price segment of the market.
The average payment period for off-plan post-handover payment schemes is now about 3.5 years. Some developers even indulge in a rather “risky adventure” with extending these terms to five or even ten years. But such offers are still quite rare.
Stay tuned to find out whether the owners will eventually have to share the registration fee with the
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