Will higher interest rates lead to lower property prices?

In short, the answer to the question of whether higher interest rates will lead to lower property prices is “not necessarily”. The Figure below plots the URA Property Price Index versus 3-Month SIBOR, and in general if we look over the entire 25 year period it looks like the two are negatively correlated (i.e. periods of falling interest rates seem to correspond to periods of rising property prices and vice versa), but the relationship is not tight. There are several periods of rising interest rates that have also corresponded with rising property prices. Interest rates, while a significant factor to the property market,are only one of several factors that affect it.