Dubai house price growth rate has slowed down to 16 per cent in the second quarter from 42 per cent in the first quarter this year, according to a report released by Colliers International, a real estate consultancy.

Launching its 'International House Price Index' in the second quarter of 2008 for Dubai on Wednesday, Colliers said the annual house prices in the emirate grew 76 per cent in the second quarter when compared to the corresponding period last year.

The HPI report pointed out that the average price increase was significantly high when compared to other major international cities over the same period.

The index showed that prices increased across all market sectors covered which include apartments, villas and townhouses.

The demand for residential property mortgages, an indicator of the demand for property, was very strong and increased significantly from the previous quarter. This increase in demand caused prices to rise as supply remained short, said Ian Albert, Colliers regional director, citing the report.

'While our research shows that overall growth has slowed from 42 per cent in the first quarter of 2008 to 16 per cent in the second quarter, it is worth noting that overall price growth still occurred across all residential sectors,' he observed.

'If you consider the performance of other global cities over the same period, Dubai offered attractive returns comparative to these markets. Looking forward to future quarters we expect a return to fundamentals as the demand-supply dynamic moves towards equilibrium.'

Factors that have contributed to the rise in house prices include an increase in construction costs, rising inflation, and the erosion of the UAE currency value relative to other world currencies, Colliers said.

'The average blended rate per square foot for residential foreign ownership property in Dubai in second quarter this year was Dh1,833.'

'The average blended rate per sq ft for properties under construction in Dubai during the same period was Dh1,908 (rate per sq ft excluding Downtown Burj Dubai was Dh1,400),' Albert explained.

The average blended rate per sq ft for completed property in Dubai during the second quarter was Dh1,783 (rate per sq ft excluding Downtown Burj Dubai was Dh1,679).

The key findings of the report include quarterly upward change for the overall index of 16 per cent between first and second quarter this year.-TradeArabia News Service