Wednesday, May 28, 2008
Boom or Bust ?
Emirates business 24: Steps needed to avoid West-like bust
"For a country, which has almost made a fetish of the property, and which has used the rising value of property assets as the basis of its prosperity for many years, the consequences of this collapse are excruciating"
Posted by housebear @ 09:53 PM (504 views) Add Comment
4 Comments
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1. montesquieu said...
Same old delusions. Not a great part of the world for shit to start hitting fans though. Bust is inevitable - world demand takes a tumble, oil price falls, confidence evaporates = bust. Any of the cycle merchants have a timescale?
2. Montesquieu said...
'On the face of it, property in the Emirates is in a cycle of near-unstoppable boom – 53 per cent a year increases in Abu Dhabi, where demand is outstripping supply with every worker the capital's fast-growing economy attracts. In the more mature property markets of Dubai, the rate of increase in value is less striking, but there would be no surprise if it reached 20 per cent year-on-year. Both cities have ambitious long-term plans to expand their populations.
''There are other factors at work that argue against the notion of a property "bubble" in the UAE.'
This is his evidence AGAINST a bubble? Hilarious.
3. European-bear said...
If it looks like a bubble, smells like a bubble it is a bubble.....its just rubbish saying they are fine tuning the growth and its under control when prices are rising by 50% per year (supported by sound economy!!!!). UAE will bust like most places, its just timing! If you want to see a market where prices are stable and no bust is likely try Switzerland. Slow rise of about 10% over the last 6-7 years (i.e. 1-2% a year), in line with GDP growth. This is achieved by 1. Making home buyers have at least a 20% deposit to buy 2. Capital gains tax on residential property, front loaded if you sell early in the first 5 years and only dissapearing if you own the property for at least 20 years. 3. Property tax based on the imputed rental return as if the property owner was renting, which is then added on to income at the top marginal rate.....And the banks will not lend you a penny without proper certification of income. These policies ensures speculation does not pay and you only get a mortgage if you can afford it and you buy a home not an investment.....
4. sosoon said...
This economy will have a spectacular burnout; property appreciation may look good on paper (just like it did in the UK). But in this happy Emirate inflation is running at around 15%