The United Arab Emirates central bank governor said on Wednesday he was not worried about a new house price bubble similar to one which burst in 2008, halving property prices in the following two years and pushing Dubai close to default.
Prices have risen again in the past year and the central bank imposed limits on mortgage loans this week to prevent another boom-and-bust cycle in the property market.
“We are watching house prices, we are not worried. Banks are very cautious, they are not the same as in the boom years of 2005 to 2008,” Sultan Nasser al-Suweidi told reporters on the sidelines of the World Islamic Economic Forum in London.
“I am not worried that banks will pump money into the real estate market and some bubble will develop.”
Dubai’s house prices have risen over 20 per cent in the last 12 months, prompting the International Monetary Fund to warn in July of the risk of another bubble forming.
Suweidi said bank lending was likely to rise this year, however, compared with last year, without giving exact figures.
He said the new limits on mortgage loans would help the banking sector.
“That will be beneficial to the market because it will define for all banks what is possible, what is not possible.”