Real Estate Cycles & Mortgage Debt

Like all markets, the real estate markets experience growth and slowdown. During  rapid economic growth, less real estate is available for buyers as too many people with funds are chasing the same real estate assets. During times of economic slowdown, the supply of real estate exceeds demand. This blog explains the four phases of real estate cycles and what they mean to those looking to settle their mortgage debt.

Occupancy Rates: An Indicator of Real Estate Cycles

Occupancy rates are an indicator of real estate demand. For example, as of April 2021, the average occupancy of residential properties all over Dubai was 80. This means 80% of all residential apartments in Dubai were occupied (including properties occupied on a rental basis). This occupancy rate is lower than the historical average of around 89% in Dubai. The low occupancy rate is an indicator of the economic impact of COVID-19 with people leaving the country due to unemployment.

How are Real Estate Cycles Linked to Mortgage Rates

Interest rates play an important role in influencing real estate cycles. For example, low-interest rates boost the demand for real estate. In response to the COVID-19 crisis, banks all over the world have reduced their interest rates. This has led to a housing boom in several markets of the world. The positive impact of low interest rates is also being seen in Dubai. It is expected that Dubai’s house prices will increase for the first time in 6 years.

How should Borrowers Respond to Real Estate Cycles?

There are 4 stages in a real estate cycle:
  • Recovery (when the market recovers after a recession)
  • Expansion (when the economy and real estate market is growing)
  • Hyper supply (when supply exceeds demand)
  • Recession (when the supply is much more than demand)


For those struggling with a mortgage, this is a sign of hope. If their property rates are currently lower than their mortgage due, recovery will mean they can hope for a favourable debt settlement in the future.


This is a time of growth, and people are optimistic about investing in real estate. People wanting to get out of a mortgage can get high value for their properties and even make a profit over their original purchase price.

Hyper Scaling

This is a time when there is too much real estate inventory in the market. The UAE’s property market has experienced such a scenario in the past. People with a mortgage are required to negotiate the best possible debt settlement solution based on prevailing rates in the market.


As we had seen during the COVID-19 crisis, the supply of real estate is much more than demand during a recession. People with a mortgage should negotiate with banks in a way that minimizes the losses for both parties. During a recession, banks are willing to accept various solutions for the repayment of a mortgage loan.

As you can see, settling a mortgage with a debt management plan requires a different approach during each stage of the real estate cycle. Knowing the present stage of the real estate cycle can help arrive at the right debt management solution.

Contact FREED for Debt Management Assistance!

As a professional debt management solution provider, FREED interacts with hundreds of borrowers and has a very broad view of the real estate market. On the contrary, individuals can find it difficult to identify the current stage of the real estate cycle.

With an experienced team of mortgage debt counsellors, FREED is able to negotiate suitable debt management plans with lenders depending on the prevailing stage of the real estate cycle.