Eight in 10 searchers aim to buy UAE homes in next five years
More than eight of out 10 non-home owners in the United Arab Emirates expect to purchase property within five years.
Despite a complex market environment and low salary growth, the dream of home ownership is still alive for people in the UAE 82% of people expect to buy, according to new research from HSBC.
A quarter (26%) of millennials (those born between 1981 and 1998) in the UAE own a home, while 67% of recent home owners found the total cost of buying a home to be higher than budgeted and half of millennial home-owners used their parents as a source of funds, says the Beyond the Bricks report.
Planning for this investment appears to be a concern with lack of funds for a deposit being cited as one of the main barriers to buying property, while poor budgeting practices resulted in most recent home-owners overspending on their purchases.
Kunal Malani Head of Customer Value Management, MENA, Retail Banking and Wealth Management, HSBC Middle East, says, “While we do appreciate that the market conditions today are challenging, there are clearly areas where people can make improvements. By getting a full view of your finances and remaining committed to a budget, you can go a long way towards reducing existing and future pain points. For example, we always advise people budget at least 35% for a deposit when looking to buy a home so that they can accommodate any unexpected costs and fees that arise.”
The new global research report from HSBC looks to provide insights into how people feel and behave when buying, renting, and owning their own homes. It assesses the views of over 9,000 people in nine countries, and more than 1,000 respondents in the UAE.
The findings examine the sentiments of four groups of people: total home owners and total non-owners, along with sub-categories of millennial home owners and millennial non-owners – which includes individuals between the ages of 18 and 36.
More than a quarter (28%) of people already own a home, and among those who do not, 82% intend to buy one within the next five years. These sentiments are slightly higher than the global average where 73% of non-owners intend to buy property in the same period, but they are in line with the attitudes of millennials in the country. While 26% of people between 18 and 36 are home owners, 80% of non-owners in this segment intend to buy a home within five years.
However, there are significant barriers to achieving these goals, with total non-owners in the UAE highlighting the need for a higher salary (62%) and the need to save more for a deposit (42%).
In addition, people are not planning carefully, with 82% of total non-owners across the UAE saying that they only have an approximate, or no budget at all when they intend to buy. As a result, it is not surprising that among total home owners who have purchased property recently, nearly 7 in 10 (67%) spent more than they had initially budgeted. The most common reasons for this – broker fees (64%), legal fees (62%) renovation costs (57%) – are all instances that could be avoided with a well-structured financial plan.
Although total home owners end up managing unexpected costs primarily by withdrawing from savings (59%), there are ways in which this can be addressed more effectively, with only 37% willing to cut back on spending currently.
Amongst the millennial non-owners, 45% say that they would spend less on discretionary expenses. Nonetheless, there are areas for improvement such as moving in with a relative to save for a deposit –only 6% do so – which would also reduce the need to depend on other sources, such as parents. Today, half of millennial home owners (50%) have used the ‘Bank of Mum & Dad’ as a source of funding, which is the highest globally. This far exceeds around a third of millennial home owners who relied on their parents in the UK (35%) and US (32%).
Part of building an effective plan also involves better understanding the real estate market and when it is the appropriate time to buy.
Craig Plumb, Head of Research – MENA, JLL, says, “With prices having declined over the past 18 months, 2017 will continue to be a buyer’s market in Dubai. Our research shows that sale prices are now bottoming out, although transaction volumes remain low. We believe the market is close to the bottom of its cycle, with some increases possible in the second half of 2017 as the market recovers again over the next few years. Given these conditions, now is a good time for those interested in buying property in Dubai.”
Beyond the Bricks is an independent consumer research study into global home ownership, commissioned by HSBC. It provides authoritative insights into peoples’ attitudes and behaviour towards home buying, renting and funding around the world.
A global factsheet, Beyond the Bricks: The meaning of home, has also been produced and represents the views of 9,009 people in nine countries: Australia, Canada, China, France, Malaysia, Mexico, UAE, UK, USA.
The findings are based on a survey of home owners and non-owners aged 18 or older from a nationally representative online sample in eight countries and a nationally representative face-to-face sample in the UAE. The research was conducted by Kantar TNS in October and November 2016.
Source - http://www.opp.today/eight-in-10-searchers-aim-to-buy-uae-homes-in-next-five-years/