For first-time home buyers, the UAE is the best country, MoveHub, which determined the best countries for first-time buyers using data from the Global Property Guide and the Hay’s Group Global Salary Forecast, has pointed out.
Property prices in the UAE experienced a slump in value of -7.96 percent in 2016 while average real wages enjoyed a boost, reported Khaleej Times.
However, a significant proportion of young expats in the UAE are struggling to get a foot on the property ladder, forcing them to spend copious amounts of money on renting instead, the report said.
Prospective home buyers reportedly blame the current mortgage regulations in the UAE which make it difficult for them to make a transition to ownership due to the high level of upfront deposit required.
Expats are required to put down 25 percent of the property’s value as an initial down payment before taking out a mortgage for a ready property, said the news portal.
“Even at a 75 percent LTV contribution by the bank, the initial equity required by first-time home buyers is almost one-third of the property value. Stamp duty, brokerage, loan arrangement fees, mortgage registration charges, etc., can amount up to 7.5 percent of property value,” Manika Dhama, senior consultant at Cavendish Maxwell Property Consultants, was quoted as saying.
However, some industry experts reportedly insist it is good to put down 25 percent of the property value as equity so that the buyer does not over leverage.
“First-time buyers would get a big boost if the Central Bank were to relax the initial equity required to 10 percent from the current 25 percent. There cannot be a better incentive for people to make the UAE their long-term home if they are invested in their primary residence,” Sanjay Chimnani, managing director, Raine & Horne Dubai, reportedly said.
Factors incentivising first-time buyers to take the plunge are a correction in real estate prices in the UAE, attractive payment plans (weighted more towards payments post-handover), low interest rates and the availability of affordable low to mid-market units.
“UAE today more than at any point since 2012 offers the best opportunity for first-time home buyers,” Chimnani was quoted as saying.
The consultancy Core estimates 50 percent of new stock in Dubai this year to come up in suburban apartment districts such as Dubai Silicon Oasis (DSO), Dubai Sports City and Dubailand. Properties here are priced between Dh0.8 million to Dh1.5 million, making them affordable for first-time home buyers, reported Khaleej Times.
First-time buyers are also more likely to go for ready properties although off-plan homes come a tad cheaper and provide flexible post-handover payment plans, the report said.
For first-time investors, 2016 reportedly presented competitive options in the form of aggressive sales launches at Emaar South and Dubai South. Affordable residential communities on Mohammed Bin Zayed Road such as DSO, Sports City and Jumeirah Village Circle (both off-plan and ready) also have attractive buying options.
“First-time buyers looking for homes for self-use are more likely to prefer taking out a mortgage. Banks typically prefer lending against completed properties and with prices having stabilised in most areas, options in completed buildings [2BR for instance] are available at Dh700,000 and upwards,” Khaleej Times quoted Cavendish Maxwell’s Dhama as saying.
