How to navigate the age-old dilemma of listing versus leasing a home
Dubai: There are many reasons why a homeowner might want to move. But whatever your reason, one question still applies: What should you do with your current home? Depending on your financial situation and your housing market, you might consider renting it out rather than selling.
“The property market in the UAE has been resurging this past year, with a growing appetite among buyers and investors driving a record number of real estate deals across the sector,” said Stephanie Myrtle, vice president of a Dubai-based real estate research firm.
“With property prices rising in most areas you may have also been wondering whether it is an ideal time to sell or rent your house out in the current rebound-driven backdrop. While deciding on selling or renting out your property depends on your circumstances, there are pros and cons to consider.”
The property market in the UAE has been resurging this past year, with a growing appetite among buyers and investors driving a record number of real estate deals across the sector
How to decide between renting, selling
Selling or renting your home is a big commitment. So it’s beneficial to assess the housing market since it could make a huge impact on your final decision. Let’s review four housing indicators property experts use to evaluate a housing market, which are recommended also to help you think through your options.
1. Housing supply:
Housing supply is simply the number of unoccupied properties in your area. “The pricing of a home is heavily influenced by housing supply. You can figure out when a large amount of people are moving to an area when the housing supply decreases,” said Prakash Bhat, a property consultant in Abu Dhabi.
“When this happens the average price of homes in that area will rise due to the increased competition. In contrast, if the housing supply is high, it’s an indication that homeowners are leaving the area. This will cause the average price of homes to drop.”
Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.
2. Home prices:
Home prices reveal the average selling price of a home. The price doesn’t affect affordability, it only indicates how home values have moved over some time. “Higher home prices can be beneficial for homeowners whether they want to rent or sell,” added Myrtle.
“It’s possible to raise the rent when home prices are high in your area, given that the low availability of homes doesn’t meet the demand of people relocating to the area. More than likely, you will also be able to receive a higher final selling price for your house when home prices in your location are booming.”
3. Home sales:
Home sales data tells you how fast people purchase homes in a particular area, in other words, how much competition there is. If home sales are plunging, it signifies that there’s increased competition for properties in that area.
“Due to competition, negotiating with sellers may be in vain since other buyers could be willing to pay the price to get their hands on the property. But if home sales drop, you have entered a buyer’s market. This means you have less competition to buy and more flexibility to negotiate with sellers,” added Bhat.
4. Rental affordability:
Rental affordability indicates whether a typical rental household has enough income to qualify to rent a home or apartment. Typically, a tenant will spend 30 per cent of their income on rent. Therefore, if a tenant spends less than 30 per cent of their income on rent, then rent affordability is considered high.
“If rent affordability is low, property owners will likely attract renters as they might not have the funds to purchase a home. When rent affordability is high, it may be beneficial to sell your house, as those who were thinking of renting might realise it is financially feasible to own a home,” said Myrtle.
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