According to a report released on Wednesday, Asteco said that the drop in sales prices is seeing an increase in transaction activity as buyers take advantage of lower-priced units.
Apartments in Jumeirah Beach Residence and Dubai Sports City reported the highest average decline in sales prices of 53 per cent less than the prices in Q4 2008. Palm Jumeirah and Dubai Marina followed closely behind at 46 per cent and 44 per cent respectively. The report noted that the demand is high for properties in Dubai Marina, Jumeirah Lake Towers, Discovery Gardens and Emirates Living but due to non availability of mortgage, cash buyers currently are highly sought after.
Villa developments experienced a greater decrease in sales prices as compared with apartments, with prices falling an average 43 per cent across the emirate. Most affected were units in Jumeirah Island and Springs, which reported a drop of 65 per cent and 61 per cent respectively.
Arabian Ranches and Meadows also saw a reduction of 55 per cent in property prices during the first quarter.
The global financial crisis has affected the liquidity in the domestic banking sector. The banks have tightened lending requirements and are demanding higher down payments for mortgages. The banks, which were doling out 95 per cent of the property value as mortgage, are now offering loans as low as 40 per cent of the property value. The non-availability of housing loans has discouraged investors from buying. Interest rate for mortgages has also increased.
According to Asteco, the interest rates offered by various banks are in the range of 7.75 to 10.6 per cent, compared to an average of 5 per cent before the liquidity crisis.