Dubai’s extraordinary property run has hit a turning point, with residential prices recording their first annual fall in more than five years as a wave of new housing supply and more selective buyer behaviour begins to reshape the market.
Average residential sales prices fell 1.7 per cent year-on-year in August to Dh1,636 (about A$675) per square foot, according to Cavendish Maxwell data reported by Khaleej Times. Prices were also down 1.3 per cent over the latest three-month period.
It marks the first year-on-year fall in average home prices since February 2021 and follows an extended period of strong price growth that transformed Dubai into one of the world’s most closely watched residential markets.
However, the latest figures point towards a cooling market rather than a collapse.
Almost 10,900 homes changed hands during August, with sales worth Dh23.4 billion, while total transaction values since the beginning of 2026 have reached almost Dh270 billion.
August sales volumes were about 14 per cent lower than in July, with Cavendish Maxwell attributing part of the decline to Dubai’s traditional summer slowdown.
Transaction values over the first eight months of the year were also 24 per cent lower than during the corresponding period in 2025.
Cavendish Maxwell director and head of residential valuation Ronan Arthur told Khaleej Times the latest figures were consistent with a market moving into a different stage of its cycle.
“The August data confirms what our in-depth market insight – covering quarterly, six-month and annual statistics and trends – has been telling us for a while: prices are softening and the market is entering a more mature cycle,” Ronan said.
Despite the softer conditions, off-plan property continues to dominate Dubai real estate, accounting for about 75 per cent of residential transactions in August.
The enormous pipeline created during Dubai’s property boom is also expected to play an increasingly important role in the market.
Earlier this year, The National, citing Moody’s Ratings, reported about 180,000 new homes were expected to be delivered in Dubai between 2026 and 2028.
That equates to about 60,000 new properties annually, well above the historical average of 30,000 to 40,000 homes a year recorded over the previous five years.
Developers have capitalised on rising prices since 2021 by selling increasing numbers of properties off-plan for completion several years later, meaning much of the stock sold during the boom is only now moving towards delivery.
Moody’s vice president and senior analyst Lisa Jaeger told The National in February that the additional supply was expected to moderate the market.
“Moody’s Ratings expects a modest cooling in UAE residential prices and developer sales over the next 12 to 18 months as new supply comes online,” Lisa said.
“However, market fundamentals remain strong, supported by population growth and continued inflows of high-net-worth individuals.”
The ratings agency said the apartment sector was particularly exposed to the additional supply, with more affordable studios and one-bedroom properties potentially experiencing outright price declines.
The change follows five years of exceptional growth in Dubai, fuelled by population gains, international investment and government reforms designed to attract foreign residents and capital.
The National reported almost 130,000 new investors entered Dubai’s property market in 2025, while Dubai Land Department figures showed total real estate transactions climbed more than 20 per cent to 270,000.
The value of those transactions also increased 20 per cent to Dh917 billion, making 2025 the market’s strongest year on record.
Residency reforms, including permits for retirees and remote workers and an expansion of the UAE’s 10-year Golden Visa program, have also helped attract international buyers, while an influx of wealthy residents has supported the luxury end of the market.
Cavendish Maxwell said the fundamental drivers of demand remained intact, but fewer project launches, regional uncertainty and a broader normalisation of buyer activity were influencing conditions in the short term.
For developers, the expected slowdown also comes from a relatively strong financial position.
Moody’s said major developers were better placed to withstand a moderate slowdown than in previous property cycles due to strong cash flows, substantial sales backlogs, upfront buyer payments and stronger balance sheets.
The result is an increasingly two-speed Dubai property market: one adjusting to significantly higher levels of supply and softer price growth, while off-plan sales and underlying demand continue to support substantial transaction activity.
Rather than signalling an end to Dubai’s property appeal, the August figures suggest the market is entering a test of whether the extraordinary growth of the past five years can transition into a more sustainable cycle.
Primary sources used: Khaleej Times , The National