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Real estate prices in Dubai declined for the first time in over two years in January, according to a report by Property Monitor. Average property prices fell by 0.57% in January 2025 compared to December 2024, dropping to AED1,484 ($404) a square foot. The decline marks the first price decrease since July 2022, when there was a dip of 0.58%.

The report said the median price in Dubai for apartments was AED1.35m, townhouses AED2.67m and villas AED6.92m.

The drop in prices comes against the backdrop of a market that has experienced strong price growth. Since the start of the latest property cycle 51 months ago, monthly appreciation has averaged 1.19%.

More recently, there has been a marked slowdown in price momentum. Following a peak in August 2024 with a 2.48% increase, monthly gains began to moderate, dropping to 0.48% in November and 0.88% in December before turning negative in January.

“After four years of continuous growth, Dubai’s real estate market is starting to show signs of stabilisation,” said Zhann Jochinke, chief operating officer of Property Monitor.

“While the total number of transactions remains strong, affordability constraints and market maturity are beginning to shape the landscape. With sales volumes and mortgage transactions moderating, Dubai’s property sector could be transitioning from a continued phase of rapid growth to a more sustainable trajectory.

“A careful balance of supply and demand will determine the future of the market in 2025 and beyond.”

Despite the slight decline in prices, transaction volumes remained robust. January saw 14,413 sales transactions, a 4.6% drop from December but still the highest ever recorded for the first month of the year.

Off-plan transactions, which have been a key driver of market growth, declined by 17.7% from the previous month. Meanwhile, title deed transactions – indicative of completed property sales – increased by 15.7%, suggesting a growing shift towards completed units.

The surge in off-plan supply continues to raise questions about market sustainability. In January alone, 53 new off-plan projects were launched, bringing over 12,400 units to the market.

Developers remain optimistic, but concerns over potential oversupply are growing, particularly if demand weakens or affordability issues persist.

Mortgage activity also saw an increase, with transactions rising by 6.8% month-on-month to 4,134. However, recent enforcement of UAE Central Bank regulations restricting broker and transfer fees from being included in mortgage amounts may impact future borrowing activity, which may also cool the market.