Dubai home-price gains slowed in the first quarter after financial authorities took steps to cool the booming market, broker Knight Frank LLP said.
Values in the emirate rose 3.4 percent, less than Lithuania, Estonia and Malta, Knight Frank said in a statement today. That compared with a 9.2 percent jump a year earlier. Even so, Dubai home prices climbed 27.7 percent during the 12 months through March, the most in the world.
Dubai financial authorities have been trying to tame a market that has lurched between boom and bust since it was opened to foreign buyers in 2002. The United Arab Emirates Central Bank has restricted mortgage lending and the government doubled transaction fees as rapid price increases sparked concern that a bubble was forming.
Home values worldwide increased 0.6 percent in the first quarter, compared with a 1.2 percent gain in the previous three months, a Knight Frank index of 54 countries showed. Prices in the countries tracked climbed by an average of 7.1 percent over the 12-month period.
Banks in the U.A.E. increased construction lending by 40 percent to 181 billion dirhams ($49 billion) in 2013, according to the latest central-bank data, the most since 2008 when loans jumped 81 percent.
“The final quarter of the year often sees a peak in sales,” Kate Everett-Allen, head of international residential research, said in the report. “Buyers rush to complete sales before the New Year when new tax rules often come into effect, leading to a quieter market in the first quarter.”
The worst-performing markets over the last 12 months were Croatia with a 9.7 percent drop, Cyprus, which fell 8.7 percent and Greece, where prices were 8.4 percent lower. It’s the first time since 2008 that none of the countries tracked fell by more than 10 percent, according to Everett-Allen.
Singapore and Japan are the only non-European countries that ranked in the bottom 10 as cooling measures and tighter mortgages halt price growth in Singapore. In Japan, Prime Minister Shinzo Abe’s growth strategy has yet to push house-price growth into positive territory, according to London-based Knight Frank’s report.