DUBAI (Reuters) - Dubai house prices have fallen sharply in the next two years, a slowdown in the economy and an oversupply of housing units herald a further decline in already weak expectations, real estate experts polled by Reuters on Wednesday.

Dubai, which has a diversified economy based on trade and tourism, has faced a sharp slowdown in the property market for most of the decade, except for a brief recovery more than five years ago.

The downward trend in Dubai's housing market activity, which is a key factor in its GDP, is expected to continue.

A Reuters poll of market analysts at 11 investment firms and a research institute between August 14 and September 3 showed house prices in Dubai would fall 10% this year and 5% next year and are expected to fall 3.3% in 2021.

Trade war
These views are also driven by concern that global growth has been hit by the trade war between Washington and Beijing, and is consistent with similar polls conducted by Reuters that showed activity in the housing market in the United States, Britain, Canada and India is struggling.

Dubai's economy grew only 1.94% last year, the slowest since the 2009 financial crisis, amid a slowdown in the property market.

Dubai's economy, which relies on tourism and global corporate services, is now expected to grow 3.8 percent in 2020 and 2.8 percent in 2021, the government said. But this will depend mostly on external factors.

Reuters: Dubai real estate prices have fallen between 25% and 35% since the mid-2014 peak (Reuters)

Glut of exhibits
A recently announced government stimulus package could trigger a recovery in the real estate market, but the excess supply of housing units is likely to hurt prices and demand.

"There is currently a glut on the market, which is the situation over the last two years," said Haider Tuema, head of property research at Falostrat.

"There have been record numbers of sales projects on the map since 2017 with very successful sales campaigns promising very attractive post-delivery payment plans for investors over a number of years, affecting the capital values ​​of properties already in Dubai."

But when asked what might boost the weakening real estate market, most analysts in the poll said that any affordable housing provision would allow for the most upside.

Other options are strong economic performance, visa reforms and Expo 2020.

"Overall, the decline in prices is beneficial to Dubai because prices have been inflated," said Lynette Abbad, research and data director at Property Finder.

"The next new supply will continue to put pressure on prices, and we will see a drop in the double digit, but that will make the cost of housing more affordable."

The survey showed that property prices have fallen between 25% and 35% since the mid-2014 peak, and that there will be no halt to this decline until at least 2022.

"Dubai's real estate market is correcting as property prices adapt to the new oversupply," said Shagai Jacob, executive director of Middle East activities at Anarok Property Consultants. "This benefits consumers who have previously looked to own a property but the price prevented them."