x Abu Dhabi, UAESaturday 29 July 2017

Government efforts to help UAE households deal with debt pay off

Around 45 per cent of survey respondents said that the majority of their household debt was incurred in buying a family home, while 36 per cent expressed that their access to loans was primarily for a car purchase.

The proportion of indebted Emirati households in Abu Dhabi fell during the first quarter of the year, as government initiatives helping nationals tackle high household debt appear to be bearing fruit.

A survey of heads of Emirati households conducted by Abu Dhabi’s Department of Economic Development (DED) found that about 28 per cent of those surveyed were borrowers, the department announced yesterday.

The proportion of households in debt is lower than it was at any time during 2013, the DED said, giving no further details. The decline was attributable to “the impact of initiatives aimed at streamlining the process of borrowing by the citizens, such as the non-performing loans treatment programme”.

Around 45 per cent of survey respondents said that the majority of their household debt was incurred in buying a family home, while 36 per cent expressed that their access to loans was primarily for a car purchase.

“This shows a significant change in the structure of the citizens loans, as it is the first time where buying a house replaces buying a car as a key target for citizens from the borrowing,” the DED noted.

“This represents a fundamental shift in the behaviour of borrowing of citizens which reflects, largely, their growing awareness of saving and investing, as the allocation of loans to buy homes is considered a saving and an investment at the same time through the home’s value and returns that can be achieved by the owner.”

About 12 per cent of respondents said that loans had been taken out for investment purposes. Five per cent had borrowed to cover marriage expenses, while 2 per cent indicated loans had been taken out to fund travel.

jeverington@thenational.ae

Follow us on Twitter @Ind_Insights