Lower oil prices and currency changes affecting expats have affected Dubai’s residential real estate market with prices and rents still down in the fourth quarter of 2016 but now close to bottom, according to the latest analysis from real estate firm Cavendish Maxwell.

But the decline in the market is slowing and property experts believe that rents and prices will be more stable in the first few months of 2017, with the strongest demand being for smaller and more affordable homes.

The analysis shows that rents fell by 1.1% in the final quarter of 2016 and average sales prices also fell, but by less than 1%. The figures also show that apartment rents fell by up to 2.2% depending on location and villa rents were down by 1.1%.

Apartment prices are now down 3% year on year and have fallen by almost 15% since the second quarter of 2014.

‘The stronger US dollar, relatively lower oil prices and resultant liquidity conditions have impacted the purchasing power of foreign investors traditionally active in the Dubai real estate market such as buyers from India, UK and Russia,’ said Sofia Underabi, head of residential valuation at Cavendish Maxwell.