Prime house prices in Dubai are rising faster than anywhere in the world, rocketing 21.7 per cent over the past year as new mortgages in the emirate surge.
According to the property broker Knight Frank, the average price of prime property in Dubai increased 14.7 per cent over the six months to June alone and by 5 per cent between April and June, helping to push up the global average.
This means that prime property has increased from Dh1,600 per square foot a year ago to Dh2,000 a sq ft today.
Knight Frank, which tracks prime house price movements around the globe, said that prime property prices in Dubai have been rising since the second half of last year, but now the emirate's mainstream property prices are also rising quickly.
House prices around the world crashed following the global financial crisis in 2008. After rampant property inflation, Dubai was one of the worst hit cities during the global financial crisis, when house prices fell by as much as 65 per cent.
The rapid rebound in property prices has sparked concerns that Dubai's housing market could once again overheat.
But Helen Tatham, the director of residential at Knight Frank's Dubai office, said that the property market this year is very different from that of 2008, with more property purchased by owner-occupiers rather than property speculators.
"During the last 12 to 18 months the Dubai market has been going through a recovery period which has really just corrected the original correction," said Ms Tatham. "This time around, however, the market is very different and we are seeing more end users buying property and using finance rather the widespread speculation which occurred in 2007 and 2008."
According to the property valuer Cluttons, the number of mortgage valuations it has been asked to carry out over the past 12 months has increased by 40 per cent compared with the same period the previous year.
But, the agent added that the level still remains about 20 per cent lower than it had been at the peak in 2007, when thousands of buyers were tempted into the UAE property market.
According to the Dubai-based property agent Prestige Real Estate, the number of clients looking to buy rather than rent has increased 20 per cent over the past year as residents return to the housing market as a way of avoiding spiralling rents.
