House prices in Dubai plunged 41 percent in the first quarter of 2009, property consultant Colliers International said on Tuesday.

The huge fall in values came as cash and mortgage-backed transactions dropped sharply, with prices registering a negative year-on-year decline for the first time of 34 percent, Colliers said in its latest quarterly House Price Index.  

The consultant blamed the fall in prices on lack of mortgage availability, poor investor sentiment, job losses among expatriates, and delayed projects, which have hit demand.

“Without any support from previous quarters Q1 2009 clearly represents the impact of the global crisis on the real estate market,” the report said.

“During Q4 2008 the UAE experienced the first real symptoms of the impact of the global financial crisis on the region; however the negative impact averaged over the three month period was softened as it included transactions initiated during late Q3 and being concluded in early Q4,” it added.

House prices have collapsed in Dubai in the wake of the global crisis and a regional liquidity crunch, making mortgage provision scarce.

In the final quarter of 2008, Colliers recorded an 8 percent drop in property values in Dubai.

Last week Swiss Investment bank UBS said real estate prices could drop 70 percent from their peak last summer.

In the report, Colliers said apartments and townhouses were the worst affected, falling 42 percent in first quarter of this year, compared to the final three months of 2008. Villa prices dropped 40 percent, it said.

On a positive note, the global real estate consultant said there was evidence of improved liquidity at the end of the first quarter 2009, but added it was unclear what effect this would have on the housing market in the medium term.

The Colliers International House Price Index was set up in January 2008 with six leading lenders to measure the average rate of growth or decline of house prices in Dubai.