Price increases in Dubai's residential property might slow this year due to persistent oversupply, following a spike in demand for bigger houses that helped the city snap a six-year losing streak in the first quarter of this year.

According to Core, a real estate consulting firm, the average increase in residential prices in 2021 will be 9.8 percent. Single-family homes, sometimes known as villas in the area, were the primary drivers of the expansion, as individuals worked from home during the epidemic and sought larger dwellings.

Villas, which account for less than 20 percent of the city's housing stock, had a 22 percent increase in value last year, according to research released on Thursday by Core. That's still roughly 16 percent lower than the previous year's peak. Meanwhile, prices of flats — which account for the vast bulk of Dubai's housing supply — increased by 7 percent in 2021, representing a decrease of almost 29 percent from their 2014 peak. Overall, rentals jumped by 6.7 percent compared to the same period the previous year.

Dubai's quick response to the epidemic contributed to the city's recovery from a years-long property downturn, which resulted in increased property prices across the board.

The United Arab Emirates had one of the world's quickest vaccine rollouts, and it was able to keep cases under control for the majority of last year.

Despite this, oversupply has plagued the market for years, limiting the extent to which price increases may be realized.

According to Prathyusha Gurrapu, Core's head of research and advisory, "we expect the price recovery to continue although at a slower pace as the market stabilizes and works through new supply, particularly in less established areas." "The price recovery will continue although at a slower pace as the market stabilizes and works through new supply, particularly in less established areas," she added. Moreover, "we must wait and watch how the market will do following Expo 2020."

According to Core, just 16 percent of the 37,000 houses that will be finished in 2021 will be villas. Core estimates that 36,000 houses will be finished by 2022, which is a reasonable projection based on Core's experience.

"With the phasing out of numerous initiatives over the previous two years as a result of the epidemic,

"This year, we anticipate a larger number of handovers," the firm said. "Further changes to supply predictions are inevitable as developers continue to calibrate their plans in response to constantly shifting market circumstances."