Dubai's secondary property market is showing signs of slowing down after an explosive growth with strong investor demand.

According to real estate consultancy CB Richard Ellis (CBRE), sales in Dubai's second-hand property market fell 10.2 per cent in August 2023, year-on-year.

The rental market has also seen a 'slight slowdown', with average rents in Dubai rising by 21.7 per cent in the year to August 2023, down from a 22 per cent growth rate in July 2023.

Dubai's secondary property market was one of the best performing segments in the months following the relaxation of COVID-19 restrictions.

The growth was fuelled by huge demand from investors from overseas markets such as France, the UK, Italy and Russia.

According to Zoom Property Insights, sales of second homes dominated transactions in the first quarter of 2022 alone, accounting for more than half (58 per cent) of total sales transactions.

In a report on Tuesday, CBRE said that while the number of sales transactions of second homes declined, sales of off-plan properties increased by 58.7 per cent.

Overall, Dubai's property market continues to see significant growth, with the total number of transactions in the residential market reaching 11,328 units in the month of August alone, an increase of 22 per cent year-on-year.

For the year to August 2023, the total number of transactions reached 79,605, a record high and a 41.7 per cent increase year-on-year. average house prices also rose by 19.6 per cent year-on-year in August, compared to an 18.1 per cent increase in July.

"This growth masks some weakness in the growth of the prime market, and we are still seeing a slowdown in price growth in some core and prime residential areas," said Taimur Khan, head of research for the MENA region at CBRE Dubai.

CBRE did not specify the reasons for the slowdown in the secondary housing market.

Asteco also noted in its Q2 2023 report that the Dubai market continues to outperform its global peers overall.

"Over the past year, the Dubai property market has continued to significantly outperform many of its global peers. Despite the UAE facing a number of global headwinds such as rising interest rates and inflation, the Dubai property market has continued to significantly outperform many of its global peers," the report said.