Friday, February 20, 2009

Mounting redundancies determine drop in housing prices

The increasing number of job layoffs will determine the amount of drop in residential prices in the next couple of months, revealed a top real estate agent in Dubai.

Vince Easton, the Sales Director at Sherwoods, when speaking during the event of Dubai International Property Show, said that the uncertain job market in the city, which is likely to see a new wave of layoffs in March, will leave a major impact on the prices within the next three months.

"We are a nation of expatriates, and if the jobs are under threat, it makes the life of expatriates more difficult," he pointed out.

The mass job cuts in Dubai, particularly in the property and construction sectors, were triggered by the market downturn, and the global economic crisis.

According to Easton, although it is known that prices have fallen by 50 percent in majority of the area, the market would hit the bottom by summer, with the prices of properties in areas such as Dubailand, predicted to fall further, during the period.

Rents had come down to as much as 40% in Dubai during the last three months, and overall sales too went down during the same period.

The key to recovery of the housing market lies with the banks offering more liquidity for financing, and this is unlikely to happen until the market has bottomed out, Easton said.

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