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The rate of luxury price growth declined by 0.2 per cent in Dubai in the third quarter, according to Knight Frank's Prime Global Cities Index. The drop was in part due to temporary factors such as Ramadan, which led to weaker buyer activity, and the UAE Central Bank's mortgage cap, which has been made more stringent for those purchasing property above Dh5 million.
Luxury prices in the emirate, however, climbed 2.6 per cent year-on-year in September, placing Dubai in 21st place in the quarterly index, which takes into account the top 5 per cent of the housing market in 33 global cities tracked by the report.
The index increased by just 0.2 per cent in the quarter, its weakest performance in two years, as prime residential prices in the world's leading markets rose by 4 per cent over a 12-month period, down from 6.6 per cent a year earlier.
The moderate price growth was partly attributable to the summer holiday season, which often sees slower sales activity, reducing the pressure on prices.
The prospect of tightening monetary policy in the US, the approaching election and ongoing discussions of a mansion tax in the UK, the persistence of cooling measures in key Asian cities and a new set of negative economic indicators emanating from Europe were also seen to likely have been contributory factors.
Despite the index's muted performance in the third quarter, luxury prices continue to outperform their mainstream counterparts. The average price of a luxury home on the index is 36 per cent higher than it was at the index's lowest point in the second quarter of 2009, while the average price of a mainstream property has risen by 14 per cent over the same period.
Tokyo and Cape Town were the strongest performers during the quarter, with prices rising 9.2 per cent and 6.3 per cent respectively.
Read more about Dubai's luxury property which slips off growth trajectory
Source: Property Weekly