Dubai house prices fell 6 percent on the year in the third quarter to their lowest level since the second quarter of 2009, due to the seasonal summer slowdown and tough financing conditions, Colliers International said on Sunday.

Prices in the emirate, home to the world's tallest building, also fell 6 percent from the previous quarter. That was the second consecutive quarterly fall this year, the property consultancy said.

The number of transactions in the third quarter fell 4 percent from the previous quarter, it added.

'After a period of stable prices we are beginning to witness a shallow but lengthening slide in overall average prices,' said Ian Albert, the firm's regional director.   

'Despite some improvements in loan to value ratios and interest rates, lenders, the banks and financial institutions remain committed to a conservative lending policy typified by greater due diligence in the lending criteria,' Albert added.

Colliers expects around 33,000 new homes to be delivered to the market by the end of 2010, down from its previous estimate of 41,000.

'However, given Dubai's history so far, a large number of these units may not be delivered on time and may cross over into 2011,' the report added.   

Apartment prices fell 7 percent in the third quarter from the previous quarter, villa prices declined 5 percent while townhouse values fell 8 percent, Colliers said.   

Dubai house prices will fall another 11 percent before hitting a trough in 2012, a Reuters poll in October found. - Reuters