Aberdeen house prices could be used to predict the price of oil

House prices in Aberdeen could hold the key to predicting the future price of oil, according to academics at the University of Aberdeen.

Research carried out by Dr Martin Wersing and Dr Rainer Schulz, from the University’s Business School, reveals that the price of housing in the Granite City can be used to provide a more accurate forecast of the oil price.

Dr Wersing said that information-sharing among professionals working in the city’s oil sector has an impact on the local housing market, which in turn provides an indication of potential shifts in the price of oil.

“Only in Aberdeen are discussions of house and oil prices so intertwined,” he explained. “If an oil price increase is expected, future income will be higher on average and people should be prepared to pay more for a house.

“The buying decision will be discussed with colleagues and friends, who might ponder about trading up. Eventually, by acting on the expectation of a higher future oil price, the current house price should increase.

“The house price in Aberdeen therefore condenses specialist knowledge on the future of the oil price, and our research shows that that house prices from cities where the oil industry is dominant – in this case Aberdeen – are one indicator that has the potential to improve forecasts.”