Tighter consumer spending saw asking rentals for stand-alone houses drop half a percentage point, while town house rents fell sharper by 1.9 percent.
Hass Consult Property Development Director Farhana Hassanali, attributed the drop to tenants feeling the financial pinch, reflecting more subdued pricing in the upper market.
“We’ve seen drops in rentals and asking prices, except in smaller apartments. I think the market is relatively stable despite the economic times and I expect to see that general stability continuing, but perhaps a slight slowdown in momentum,” she said.
However, the slowdown in the market, Hassanali noted, will not translate into significant price drops as a result of fewer forced sales in a fairly light mortgage market.
Despite a one percent drop in property prices in the last quarter, the index showed property prices still reflected a 10.9 percent increase so far this year.
Asking prices for standalone houses fell by 1.8 percent, while town houses and apartments showed an increase of 0.7 percent and 0.6 percent, respectively.
We are however set to see postponing of home-buying decisions, Hassanali revealed, due to the recent hike of the Central Bank Rate (CBR) to 16.5 percent.
“This is particularly going to affect the middle market, who are exceedingly reliant on mortgages and where the increased lending rates may make mortgage repayments unaffordable,” she noted.
Developers are expected to be equally impacted especially those working in the mid market, who rely on construction financing.
The exchange rate volatility has also hit the construction industry hard, with high material costs, compounded with rapidly rising land prices.
Maintaining high land prices, however, will become increasingly difficult with developers opting to offer less for plots to ensure the projects they put up absorb into the market, Hassanali points out.