Is the renting versus buying equation swinging towards renting?

The problem with this debate is that the true answer changes through time, and that the circumstances of individual buyers do make a difference.

For example, the argument for somebody who intends to sell their home after three years is rather different than for somebody who plans a decade or more in Dubai. For if you plan to be in the city for 10 years you will have to pay rent, which will definitely give you a zero return after a decade.

Alternatively if you buy then you take the risk that house prices might be lower in 10 years, which given historic inflation levels and global price trends looks unlikely, particularly in a dynamic hub city like Dubai. But if you are thinking more short term then the supply situation is more of a concern.

Price weakness

For as the current mega projects deliver thousands of units on to the market over the next couple of years there is real doubt over the speed that this property will be occupied. That means lower rentals and house prices, and the buyer today may not be able to exit at a profit in a couple of year's time.

Moreover, the same prospective buyer might find that their rental costs fell within this same timeframe. Thus they will have missed out on lower rents while losing money on a property.

At the same time, local mortgage costs have been rising alongside US interest rates. A standard repayment mortgage now costs around Dhs1,000 per Dhs100,000 borrowed per month.

Fine balance

Take a one-bedroom apartment in The Greens costing Dhs900,000 and put down 20 per cent. You still have to find Dhs7,200 per month in mortgage repayments compared with around Dhs7,000 in rent. That is a fair cost, assuming rents do not fall as the supply of apartments in the Dubai Marina impacts the local rental market.

But you could soon find yourself paying more for the mortgage than the rental payment, as well as facing a possible dip in the value of your property. However, the real kicker is that in say 15 years time you own a property in Dubai and can live completely free or rent it out.

Here is where the long term view wins over the short term buyer, and for this person taking a short term hit on monthly payments will pay a big reward in the longer term. So think carefully before you buy. But do not forget that in the long run owning a property rather than pouring rent down the drain is a big consideration.

Alternatively you can try timing the market to perfection and waiting to buy in a crash. But what if you have to pay rent for a long time before the price is right? You have lost that rental money waiting, and it will take longer to pay off a mortgage.