Why Dubai's housing market slowed in 2026; sales fell 16%, prices dipped by 7%

Dubai's residential property market slowed down in the first half of 2026 as geopolitical tensions in West Asia weighed on buyer sentiment, with housing sales falling 16 per cent year-on-year, according to real estate consultancy Anarock.Residential transactions totalled AED 225.7 billion during the January-June period, down from the record levels seen in 2025. However, sales remained 15 per cent higher than in the first half of 2024, indicating that the market retained much of its post-pandemic momentum.According to the report, residential property prices declined by 4-7 per cent between February and April as the conflict temporarily dampened demand. Despite the correction, average residential prices in Dubai stood at around AED 1,900 per sq ft in H1 2026, compared with AED 1,800 per sq ft a year earlier.Aayush Puri, CEO - residential, Middle East at Anarock, said the decline was driven largely by sentiment rather than any weakness in market fundamentals."The conflict early in 2026 tested Dubai's residential market at a time when regional uncertainty was at its peak. In the months that followed, buyer activity returned steadily, prices remained resilient and demand continued to be supported by strong structural fundamentals rather than speculative momentum," he said, as quoted by PTI.Puri added that demand began recovering as ceasefire efforts gained traction, helping restore confidence among buyers.2025: A record yearDespite the softer performance in early 2026, Dubai's residential market had a record year in 2025, with property sales touching AED 547 billion across 206,166 transactions.The emirate continued to attract overseas investors, with buyers from more than 150 countries purchasing homes during the year. Indians accounted for the largest share of buyers at 22 per cent, followed by those from the UK (17 per cent) and China (14 per cent).Dubai also added more than 129,600 new property investors in 2025, marking a 23 per cent increase from the previous year, underscoring continued global interest in its residential real estate market.Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.