An overview of transactional activity by sales and mortgage transactions reveals a two tiered market trajectory, according to a report.
Sales transactions have continued to decline, whereas mortgage activity is continued to experience growth, said the report by Reidin, a leading real estate information company focusing on emerging markets.
The mortgage activity as a percentage of sales activity accounts for 55 per cent, doubling over the last seven years, it stated.
This new structure has shifted towards more mature markets such as US and UK, where the cash sales only account for 30 to 40 per cent of all transactional activity, said the report.
This shift has added to the slowing the pace of the property market as time to close a transaction has elongated. Typically, cash sales take 15 to 30 days, but mortgages take between 30-60 days due to the regulatory requirements and involvements of banks, it stated.
In recent years in the apartment space, mortgage activity in mid-income communities such as JVC and IMPZ have surpassed historically favored developed communities such as JLT and Marina.
This indicates a shift in buying preferences which has been fueled by access to bank finance.
Whereas in the villa space, Jumeirah Park, which started off as an investor product with a low mortgage to sales ratio has moved into nearly all finance sales.
This indicates that mortgage demand continues to increase across a cross section of villa communities over time, with the sharpest rate of incline being in Jumeirah Park, stated Reidin in its report.
Despite concerns being raised regarding Central Bank curbs on mortgages that came into effect in 2014, the demand across the board has increased steadily, indicating not only access to bank finance, but also a more mature price cycle in line with international markets.
On its 2017 outlook, Reidin said the trend of mortgage financing will continue to increase steadily, despite headwinds such as the strong US dollar and other exogenous factors, indicating resilient underlying demands.-TradeArabia News Service