Nagham Hassan, Market Analyst at eToro, examines why rent, not fuel, remains the bigger pressure point for UAE households, and how easing housing costs could gradually bring relief despite volatile oil prices and wider inflation concerns.
August 12, 2026 | Nagham Hassan | UAE | Real Estate | 4 Min Read
Image Courtesy: eToro
Every time Gulf tensions flare, oil prices jump and attention turns to the cost of fuel. But for most households in the UAE, the number that shapes the monthly budget is not petrol. It is rent, and residents have felt that pressure for years.
The Central Bank of the UAE’s June 2026 Quarterly Economic Review confirms this clearly: housing has been doing most of the work in the inflation figures. Abu Dhabi inflation stood at just 1.4% over the year to early 2026, but housing was up 4.7%. Dubai told an even more pronounced story, with housing up 7.4%. Official data, however, lags by a few months, so these readings capture the period leading into recent regional tensions rather than their peak. The good news, which we will come to later, is that this squeeze is finally starting to ease.
According to Nagham Hassan, Market Analyst at eToro, crude still grabs the headlines because it has been on a rollercoaster lately. Brent climbed about 25% in July as hostilities flared and disruptions spread from the Strait of Hormuz to the Red Sea, before dipping below $84 at the start of August on hopes of peace talks. UAE fuel prices track crude with a monthly delay, which is why August pump rates rose across the board, with Special 95 up 6.08% to AED3.49 a litre, according to the Fuel Price Committee, after July’s first relief in five months.
The pump moves first and loudest, but it is a smaller slice of the household budget than rent and other expenses such as food and household goods, which also absorb higher fuel costs through freight and shipping.
Food and beverage prices rose about 4% over the year in Dubai and 1.5% in Abu Dhabi, according to the same Central Bank review, with imported items hit hardest. Around the world, prices have eased, but they have not returned to pre-war levels. The UN’s global food price index sat about 1.7% above a year earlier in June, and retailers say stable prices will take time to filter through.
The silver lining is that the UAE Central Bank expects prices to stay “well below global averages,” helped by regulation of staple foods such as rice, flour and cooking oil. Even so, it raised its 2026 inflation forecast from 1.8% to 2.3%, which means consumers are unlikely to see broad-based price relief immediately.
One area where residents are starting to get some relief is housing, which takes up a large share of monthly budgets. For years, people arrived in the UAE faster than new homes could be delivered, and rents rose accordingly across both major cities. Now, real estate firms are reporting an influx of supply, which is beginning to take pressure off housing costs.
In Dubai, REIDIN’s index shows rents down 2.16% month-on-month in June and 2.55% year-on-year, while Cavendish Maxwell counted about 24,800 homes completed in the first half of the year, the strongest delivery pace in years as earlier projects reached handover. Abu Dhabi is a step behind, with rents down 1.79% month-on-month but still 3.61% higher year-on-year. However, rental increases in the emirate have been temporarily suspended since June.
New leases are already getting cheaper, but many existing tenants may not feel the relief until they renew their annual contracts and have room to renegotiate. This is why the Central Bank’s figures still showed housing costs rising into early 2026, even as the market itself was starting to shift. The bank now points to easing housing costs as one reason it expects inflation to remain contained this year.
So, the cost that squeezed households most is finally turning, but slowly and unevenly. For those signing a new lease, the market has moved in their favour, and the next few months may offer a useful window to renegotiate.
Fuel will continue to swing with Gulf tensions that no one can predict, and it may dominate the headlines. But ultimately, it remains a smaller share of the monthly household budget. The bigger story for residents is housing, and on that front, relief is beginning to appear.
One caveat remains: some of this cooling reflects a softer economy, not just more supply. In other words, it is relief, but with a footnote.
Disclaimer: The views and figures expressed in this column are solely of and by the author, and do not necessarily represent the editorial position of Real Estate Market Times.
