The index, prepared by global real estate consultancy Colliers International, recorded a drop of five basis points to 114 points from the previous quarter, representing a 4% decrease.
Compared with 2Q 2007, the index is 3% lower in value, but compared with its peak in 3Q 2008, the index is 47% lower in value.
Nonetheless, the index is still 7% higher than its lowest point of 107 points during the second quarter last year.
Colliers said new supply of housing in the market had pushed prices down while cautious market sentiment coupled with a limited, albeit improving, availability of mortgage financing had served to depress demand.
Banks are stricter in approving mortgage applications while financing is granted to selected projects only.
Meanwhile, falling rents are discouraging both investors and owner-occupiers from entering the market.
Property values across the board registered quarterly declines, led by townhouses (8%), followed by apartments (5%) and villas (3%).
The townhouse index fell by 8 points to 100 points this quarter. However, it had grown by 4% from a year ago (96 points).
The blended average rate of townhouses was AED790 psf. Townhouses constituted 17% of the total mortgaged properties used to collate this index.
Apartments fell 5% to 111 points from 116 points during the last quarter, but increased by 3% from 107 points from a year ago.
The blended average rate for apartments in Dubai stood at AED1,124 psf. Apartments constituted 34% of the total mortgaged properties used to collate the index.
Lastly, villas fell three points to 126 points from 130 points in the previous quarter, but registered a 16% increase from 109 points a year ago. The blended average for villas in Dubai was AED 913 psf.
On a quarterly basis, transactions rose 15% this quarter.
Meanwhile, the most expensive developments are, in order, The Palm Jumeirah's Villas, Downtown Dubai, The Palm Jumeirah Apartment, Dubai Marina and The Lakes Villas.
The most transacted properties are Arabian Ranches, The Springs, Victory Heights, Downtown Dubai, and Green Community.
The standard deviation recorded for the four quarters for the overall housing index was 2.14 index points, or 1.8% from the average value of 115 index points.
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