Dubai’s surging rental market is pushing more residents towards home ownership, with nearly 30% of mortgage borrowers in 2023 opting to buy after receiving eviction notices, according to the 2024 Mortgage Finder Report.
Rather than searching for another rental, these tenants found purchasing a property to be a more viable long-term solution.
The report highlights that 65% of buyers cited long-term plans in the UAE as their primary motivation. While mortgage rates average around 4%, rental yields exceed 6%, making ownership a more financially appealing option. Mortgage payments often fall below equivalent rental costs, allowing buyers to build equity instead of paying rising rents.
First-time buyers dominate the market, making up 74% of borrowers, with 94% purchasing for personal use. The majority of mortgage borrowers (41%) earn between Dh30,000 and Dh60,000, while 26% earn up to Dh30,000. Additionally, over half of buyers (53%) are aged between 31 and 40.
Mortgage transactions have outpaced property sales over the past three years. In 2023, mortgage transactions grew by 29%, compared to 21% growth in ready sales. The trend continued in 2024, with mortgage transactions growing 3.5 times faster than ready sales.
Experts emphasize that home ownership is a strategic financial move, allowing individuals to invest in an appreciating asset rather than paying rent. However, prospective buyers must consider initial costs, including a 20% down payment and around 6% in transaction fees. Additionally, community service charges and maintenance costs vary, with apartments generally incurring higher fees than villas.
The mortgage process in Dubai is relatively straightforward, with most banks requiring a minimum salary of Dh15,000. Many banks offer same-day pre-approvals, enabling a faster home-buying journey. Experts advise buyers to research property values and compare mortgage offers to secure the best deal.
News Source: Khaleej Times
