It all started with firefighting the 2019 Pandemic:
When COVID-19 hit 2019, the Fed exhausted everything they have to combat the pandemic recession, to the extent of offering nearly zero interest rate. Lower interest rates motivated businesses to invest and borrow cheap money. It also encouraged hoe buyers— attracted by record low mortgage rates—to jump into the housing market.
But what the Fed was doing to help recovering the economy from the pandemic impact is now all behind us. The Federal Reserve has completely shifted into inflation-fighting mode.
The Fed announced the increase of 50 basis points this month
Shocking the real estate markets across the US and the EU. In the US, the interest rate on 30 years fixed mortgage was 3.11% it now hit 5.27% the highest ever since 2009. Which means banks have not just increased their mortgage interest rate but also have started making mortgage legibility harder and stricter than ever before which is indeed discouraging and disabling many mortgage buyers from entering the housing market.
Where do we go from here?
No one can be certain on how aggressive and how fast the Fed will continue to hike up the interest rate, although many anticipate to be the case, but that all depends on where the inflation goes next from now. In 1981, the average 30-year mortgage rate crossed over 18%—something that ultimately plunged the U.S. economy and housing market into recession.
Dubai housing market is more resilient than other global markets
Although Dubai Housing Market is not immune to the impact of the illness of the global economy, is likely to outperform all the housing markets across the US and the EU. Dubai has a very strong resilience against the interest rate risk for three main reasons:
What is the risk on the housing market?
As mentioned above, the Fed seems to continue upwards with fighting inflation, however, so far we have not seen any major price softening in US or EU. But Dubai remains an integral part of the global economy and although it will have more resilience than other global cities, Dubai is not immune to any possible economic global impact. So I don’t see any major micro risk, it is more about the global economic risk which the entire world is subject to.
Five fundamental factors behind healthy housing market in Dubai
Get your weekly Newsletter from fäm properties about the latest news in the industry
Thanks for your interest. One of our representatives will contact you soon on your contact number or email.