Cooling property market keeps Dubai inflation steady

Dubai’s inflation rate remained flat last month against the previous month as the cooling housing market contained price rises.

Inflation stood at an annual rate of 3.05 per cent last month, virtually unchanged against November’s 3.07 per cent.

House price inflation slowed to 5.9 per cent last month, down from 6.5 per cent in November. That followed sale price falls as the property market cools.

The real estate brokerage Cluttons expects house prices to fall by 3 to 5 per cent this year.

The low oil price has slowed government spending in the region, with Oman, the UAE and Saudi Arabia all committed to trimming expenditure this year.

The strong US dollar has also lowered import prices and depressed activity in Dubai’s housing sector.

Falling subsidies have increased the price of energy, water and fuel in Abu Dhabi and Dubai.

Inflation in Abu Dhabi has continued to increase, as high demand for the capital’s housing stock pushes up prices and rents.

Countrywide inflation fell last month to 3.5 per cent on lower fuel prices.

Analysts expect inflation to slow further this year, as the region’s economies slow.

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Adam Bouyamourn

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