UAE housing costs start to fall as rents ease across Dubai and Abu Dhabi

UAE households are still being squeezed at the pump as tensions continue to flare across the region.

The US-Iran war and the standoff on the Strait of Hormuz has meant fuel prices remain volatile across the UAE, but households are set to get a reprieve when it comes to the cost of living.

That’s the view being expressed by Nagham Hassan, Market Analyst at etoro.

Every time tension flares across the Middle East, oil jumps and attention turns to pump prices.

However, as Hassan points out for most households in the UAE, the number that shapes the monthly budget isn’t petrol. It’s rent.

In an interview with Arabian Business, Hassan highlighted how the decrease in rent is what residents really care about across the UAE.  

“The pump moves first and loudest, but it’s a smaller slice of the budget than rent and other expenses like food and household goods, which also absorb higher fuel through freight and shipping.

“Food and beverage prices rose about 4 per cent over the year in Dubai – and 1.5 per cent in Abu Dhabi, per the same central bank review, with imported items hit hardest,” said Hassan.

Around the world, prices have eased, but they haven’t come back down to pre-war levels: the UN’s global food price index sat about 1.7 per cent above a year earlier in June, and Hassan said that retailers have said that stable prices will take months to arrive. 

“The silver lining is that the UAE central bank expects prices to stay “well below global averages,” helped by its regulation of staple foods like rice, flour and cooking oil, but still raised its 2026 inflation forecast from 1.8 per cent to 2.3 per cent, so consumers aren’t going to see cheaper prices anytime soon,” said Hassan.

One area where locals are getting some relief, fortunately, is housing prices, which takes up a large chunk of budgets. 

“For years, people arrived in the UAE faster than new homes could be built, and prices climbed to match, rising sharply across both cities. However, real estate firms are now reporting an influx of supply, taking pressure off housing costs,” added Hassan.

In Dubai, REIDIN’s index shows rents down 2.16 per cent month-on-month in June and 2.55 per cent year-on-year, with Cavendish Maxwell counting about 24,800 homes completed in the first half, the strongest in years as earlier projects reached handover.

Abu Dhabi is a step behind, with rents down 1.79 per cent month-on-month but still 3.61 per cent higher year-on-year, but all rental increases have been temporarily suspended in the emirate since June. 

“New leases are already getting cheaper, but most current tenants may not feel the relief until they renew their annual contracts and find themselves being able to renegotiate for a lower rate.

“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 itself now points to easing housing costs as one reason it expects inflation to stay contained this year,” said Hassan.

According to the Market Analyst at etoro, the cost that squeezed households most is finally turning, but slowly and unevenly.

“If you’re signing a new lease, the market has moved in your favour, and the next few months look like a good window to renegotiate. 

“Fuel will keep swinging on Gulf tensions that nobody can predict, and it may dominate headlines, but ultimately it is a smaller share of your monthly budget. One caveat: some of this cooling reflects a softer economy, not just more supply, so it’s relief with a footnote,” concluded Hassan.