\nThe prices of oil and property may not be directly related, but the economic impact of falling oil prices could still affect\u00a0real estate<\/p>\n
Oil prices are constantly in the headlines. While other countries have seen costs of fuel and petroleum-based products go down, costs in Singapore remain high. A\u00a0real estate executive\u00a0explains\u00a0how oil prices and property prices are connected.
\nFalling oil prices have been in the news for at least the past six months, and property prices are also on the decline. Is there a link between the two?
\nBefore we can understand oil prices, we must first understand how they are calculated. In general, when we talk about oil prices, we are referring to the prices of Brent crude, a particular grade of oil extracted from the North Sea. Brent crude is used to price about two-thirds of the world\u2019s internationally traded crude oil supplies. At time of writing, Brent crude is about USD41.20 per barrel.
\nOn a global level
\nFigure 1 (below) compares Brent oil prices with global housing prices. Global housing prices are based on the Global Housing Price Index by the International Monetary Fund (IMF), which is an aggregate of real (i.e., inflation adjusted) house prices across countries.
\nAt first glance, there seems to be little correlation between these two asset classes. From 2005 to 2007, both assets appreciated as there was an overall global economic boom which pushed up prices of most asset classes, including bonds, equities and commodities. Then, between 2008 and 2009, markets were hit by the Global Financial Crisis (GFC), which saw both oil and housing prices drop, along with most other asset classes.
\nHowever, from 2009 onwards, oil prices recovered alongside the global ecoomy before plunging in mid 2014 due to production outpacing global demand. Global property prices did not follow the oil price trend, showing little correlation between these two asset classes.
\nOn a global level at least, we don\u2019t see a correlation between oil prices and housing prices.
\nLooking at Singapore
\nWhen we compare the Urban Redevelopment Authority\u2019s (URA) Singapore Property Price Index and oil prices, it may seem that they move in tandem (refer to Figure 2). However, oil price movements have been more volatile, especially since June 2014, when it began to plunge drastically.<\/p>\n
URA\u2019s price index remains relatively stable though it is on a downwards trend. Just like global housing prices, there seems to be little correlation between Singapore property prices and the prices of oil.
The prices of oil and property may not be directly related, but the economic impact...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[1],"tags":[],"class_list":["post-10700","post","type-post","status-publish","format-standard","hentry","category-property-news"],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75ss1-2MA","jetpack-related-posts":[{"id":169194,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/oil-prices-rise-after-us-inventory-draw-venezuela-in-focus\/","url_meta":{"origin":10700,"position":0},"title":"Oil prices rise after US inventory draw, Venezuela in focus","date":"January 8, 2026","format":false,"excerpt":"\r Brent crude futures\u00a0LCOc1\u00a0climbed 24\u00a0cents, or 0.40%,\u00a0to $60.20\u00a0a barrel by 0343\u00a0GMT, while U.S. West Texas Intermediate crude\u00a0CLc1\u00a0was at $56.21\u00a0a barrel, up 22\u00a0cents, or 0.39% The post Oil prices rise after US inventory draw, Venezuela in focus appeared first on Arabian Business: Latest News on the Middle East, Real Estate, Finance,\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"https:\/\/i2.wp.com\/www.siamlandbank.com\/propertynews\/wp-content\/uploads\/2026\/01\/Oil-field-near-Lake-Maracaib-1000x667-1.jpg?fit=1000%2C667&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":128666,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/oil-prices-fall-on-weaker-growth-in-china-and-property-downturn\/","url_meta":{"origin":10700,"position":1},"title":"Oil prices fall on weaker growth in China and property downturn","date":"August 16, 2022","format":false,"excerpt":"\r Lockdown stance helps to push Brent crude to lowest level since Russia\u2019s invasion of UkraineGlobal oil prices have dropped amid concerns over weaker growth in the Chinese economy caused by repeated Covid lockdowns and a downturn in the property sector.A barrel of Brent crude fell by about 5% to\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":152630,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/oil-prices-plunge-over-2-as-opec-accelerates-output-hikes\/","url_meta":{"origin":10700,"position":2},"title":"Oil prices plunge over $2 as OPEC+ accelerates output hikes","date":"May 5, 2025","format":false,"excerpt":"\r Brent crude futures dropped 3.61 per cent, to $59.08 a barrel, while US West Texas Intermediate crude was at $56.00 a barrel, down by 3.93 per cent\r \r Source : arabianbusiness.com\r Read more...Oil prices plunge over as OPEC+ accelerates output 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\nHowever, while oil prices are not strongly correlated with property prices, it is an important commodity that paints a picture of the global economy, and could have an indirect effect on housing prices. Brent crude oil prices have fallen from a high of USD115.19 per barrel on 19 June 2014, to a low of USD26.01 per barrel on 20 January 2016. This translates to a 77 percent drop in Brent crude prices over a span of 20 months.
\nThe most talked about reason for this drastic drop is overcapacity and overproduction since the beginning of 2014. However, apart from supply side reasons, global demand for this commodity also affects prices. A global economic slowdown decreases the demand for oil and places downward pressure on prices. Given both supply- and demand-side pressures on the prices of oil, it is no wonder that prices have fallen as sharply and quickly as they have, placing budgetary pressures on economies that rely strongly on income from oil production.
\nGrey clouds on the horizon
\nNow, with the world facing a global economy slowdown, especially in China, the International Energy Agency (IEA) has forecasted that global demand for oil will drop in 2016. In the short run, low oil prices will place pressures on the oil and gas (O&G) sector, and related industries. This could adversely impact the banks that have high exposures to this sector. Furthermore, it is likely that volatility in the equities and commodities markets will persist.
\nIt is more likely that a global economic slowdown will adversely affect property prices in Singapore. With banking and O&G already hit and companies laying off staff, property buyers might be more hesitant to enter the market, especially if job security is a concern. Developers who have more exposure to markets, like China, that have been hit more severely by the global economic slowdown, might also feel bottom line pressures that would cause them to adjust prices as well.
\nIn the long run, low oil prices will be a big boost to the general economy as the cost of production has fallen.\u00a0 This could lead the next phase of growth. Therefore, low oil prices might not be the cause of doom and gloom that so many news reports mention.
\nApart from oil prices being a relevant indicator of global economc growth, there are other indicators that have a more direct impact on Singapore\u2019s property market, such as interest rate movements, the demand for and supply of properties, and government policies.
\nWhile cooling measures seem to have negatively impacted the property market, they are necessary to ensure that the market does not overheat, and continues to be sustainable. However, with an impending global economic slowdown, it is necessary to keep a close eye on the market, to make sure it is not too adversely hit, and maintains steady growth.
\nWith lowered prices in Singapore, and various indicators signalling a heavy storm on the way, property owners should review their financial situation. As a top priority, property owners should review their loan packages and see if they are able to refinance to a more stable interest rate package, to manage their interest costs.
\nMore importantly, property owners also need to ensure they can afford their properties. For those who are facing financial pressures, they might need to consider biting the bullet and downgrading. However, property owners who are financially fit can consider taking advantage of lowered prices, and consider upgrading, or rearranging their property portfolios.
\nThis article was written by Alfred Chia, chief executive officer of SingCapital Pte Ltd. It\u00a0was first published in the print version\u00a0The PropertyGuru News & Views. The online version appeared on PropertyGuru.com.sg on 24 March 2016.
\nDisclaimer:
\nThe views and opinions expressed in the article are those of the author\u2019s and do not necessarily\u00a0represent the position taken by PropertyGuru and its employees.
\nInformation provided in this publication is general in nature and does not constitute professional financial advice. PropertyGuru will endeavour to update its publication and website as needed. However, information can change without notice, and we do not guarantee the accuracy of\u00a0information in the publication or on the website, including information provided by third parties, at\u00a0any particular time.
\nWhilst every effort has been made to ensure that the information provided is accurate, individuals\u00a0must not rely on this information to make a financial or investment decision. Before making any\u00a0decision, we recommend you consult a financial planner or your bank to take into account your\u00a0particular financial situation and individual needs. PropertyGuru does not give any warranty as to the\u00a0accuracy, reliability or completeness of information which is contained in this publication or on its\u00a0website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its\u00a0employees do not accept any liability for any error or omission in this publication or on its website or\u00a0for any resulting loss or damage suffered by the recipient or any other person.
\n
\nSource : property-report.com
\nRead more…Do oil prices affect property prices?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"