x Abu Dhabi, UAETuesday 25 July 2017

Housing market rebound is good economic news

The property rebound in Abu Dhabi is the result of sound government policy and normal market forces.

Like all adages, the phrase “as safe as houses” is an expression of general truth. Historically, when it comes to solid investments, few have been as secure as property. After all, we all need a roof over our head.

And a strong property market is almost always a sign of a healthy overall economy. For that reason, we should welcome the news, as reported in The National yesterday, that property prices in Abu Dhabi have risen by between 14 and 26 per cent this year.

According to property broker Asteco, this result has been achieved in part thanks to the one-off influx of public-sector employees who are required to live in the emirate under the new Abu Dhabi government housing decree. But, more importantly, it is also reflective of a rebound in buyer sentiment following years of difficulty sparked by the global financial crisis, which saw a boom in housing prices followed by a plunge of up to 50 per cent.

The positive adjustment is particularly good news for investors, some of whom have seen no return, or have suffered losses, on their property portfolios for several years. Better rental returns for investors should help build confidence across the economy, leading to increased consumer spending.

It is true that rapidly rising prices can be a sign of an impending bubble. Indeed, if prices rose by 26 per cent every year there would be great cause for concern.

However, what we have seen over the past few months is a catch-up, putting prices close to where they should be. And, according to brokers, they remain 20 to 50 per cent below their peak level in 2008, indicating that there is room for further movement.

There is no reason why slow and steady continued growth in the property market will not be sustainable.

The property rebound is the result of sound government policy and normal market forces.

As long as Abu Dhabi continues to offer a range of accommodation options, from affordable housing for lower-income earners through to the luxury properties that are currently attracting the attention of investors and well-heeled owner-occupiers, there should be no need for concern.

In fact, we should be celebrating that the emirate’s economy has proven to be so robust and resilient.