Thursday, November 06, 2008

Lower mortgage rates, property prices may bring in affordable properties

Lower mortgage rates and stability in property prices are likely to bring in liquidity into the market, thereby making the properties more affordable, predict experts.

The Managing Director -Equity Research for Al Mal Capital, Robert McKinnon, who spoke to Emirates Business said that affordability being a major concern today, for the Dubai property market to get back in action, two solutions are possible -first being lowering of the lending rates, and second is to lower the property prices.

At present only about 20 percent of the population are able to afford a Dh.3million property. Property prices should decrease, if new people have to come forward and purchase properties. The ongoing financial crisis has brought about several international investors into the market, and with the tightening liquidity situation and the new regulations by RERA (Real Estate Regulatory Authority), it is crucial to retain the end-user interest in the market for achieving sustainable growth, said McKinnon.

In the opinion of McKinnon, Banks are already exposed to sufficient liquidity, and the government has been responsive enough to meet their requirements. If the property prices were lowered for a short-term, the lending institutions and banks would be more confident to lend higher loan-to-value.

The CEO of Mag Property Development Company, Mohammed Nimer, agrees that with the property sales slowing down in Dubai, the Government will have to protect the interest of developers, and bring about a balanced solution so as to not dampen the market.

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