Earlier this month, the US Federal Reserve trimmed interest rates for a second time this year, and the UAE central bank hit Ctrl+C, Ctrl+V, as is policy.
This leaves every mortgage holder and would-be buyer in Dubai’s red-hot property market with the question: buy now or wait it out? Let us try unpacking this conundrum for you.
Locked in?
For those now deep into repaying a mortgage, refinancing might look like a jackpot. Lower rates mean lower payments, more cash in your pockets, and maybe even a splurge-worthy weekend at the Atlantis, the Palm resort.
But here’s the catch: refinancing isn’t cheap. Processing fees, valuation costs, and settlement penalties can eat into savings. If the math doesn’t add up, don’t bother, says Vijay Valecha, CIO of Century Financial.
Fixed-rate folks? Do the calculations: are the costs worth the hassle? Likely not. But if you’re at a variable rate, there’s room to play. Lower monthly instalments are finally in reach — but don’t sprint to the bank just yet.
Valecha suggests holding off until early next year, when the dust settles and we begin to see meaningful effects of lower rates on the economy.
Read more: Damac’s Amira Sajwani is making Dubai property investing bite-sized
Buyers’ dilemma
For those still chasing that dreamy Palm Jumeirah villa or the budget-friendly JVC one-bed apartment, timing is everything.
The sweet spot: before rates tick lower and the herd charges in, driving prices even higher, according to Valecha. It’s a window of opportunity that doesn’t last long, he adds.
With 17 consecutive quarters of price increases, the UAE market is expected to continue its upward trend. Residential prices are projected to rise by 8% in 2025, with luxury properties climbing by 5%.
The clock’s ticking on locking in lower borrowing costs before the market overheats.
More cuts coming?
The Fed is adopting a more cautious approach heading into the new year, Valecha says.
Aggressive cuts are unlikely, with markets now expecting two rate cuts in 2025. However even that is not set in stone, according to Saxo Bank, with a lot of uncertainty looming in with Donald Trump coming back to the White House.
But the recent cuts could pour liquidity into Dubai’s real estate, says Tim Fox, senior advisor at Emerging Markets Intelligence & Research (EMIR).
This will boost both demand and developers, and make it more attractive for wealthy overseas investors, he adds. It’s good news for sellers, but not so much for anyone waiting for prices to cool off.
Bottom line: It’s probably a bad idea to try and time the market. Better to focus on your own financial game plan because stability beats speculation every time.
Edited by Ankush Chibber. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
