- Middle East Business News
Wednesday, 08 July 2020
1 in 10 spend at least half their income on home costs
Monday, 13 April 2009

More than one in 10 respondents pay more than 50 percent of their monthly income on their mortgage or rent, according to the results of the Arabian Business Property Survey.

Twelve percent of more than 1,000 people who took part in our poll told us they forked out between 51 and 70 percent of their earnings each month to pay for their home.

Many are still locked into deals agreed during 2008, when the property market was booming and prices peaked.

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Developers and banks encouraged and then enabled people to take large loans to speculate on the UAE’s property bubble but are finding their bottom lines significantly impacted by the global economic slowdown.

At the same time, as job cuts kick in across the UAE, many expatriates who find themselves unemployed have no option but to return home — and not all are able to clear their debts before they depart the Middle East.

As a result, developers and banks now face the threat of those same speculators defaulting on their loans.

“There is a very strong case for default in this part of the world,” warned Saud Masud, a UBS analyst in Dubai.

“Based on conservative estimates, if investors start walking away from these properties, you have about $25bn of exposure for the developers.”

In our survey, 58 percent of respondents told us they paid between 20-50 percent of their income on property costs while another 27 percent said they spent less than 20 percent on the monthly cost of their home.

A further two percent told us they paid up to a staggering 90 percent of their monthly income to pay for their accommodation.

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