UK house prices fall as Iran war uncertainty dampens demand

UK House Prices Drop Amid Middle East Conflict Concerns

In March, UK home prices declined by 0.5% on average, as reported by Halifax, the nation’s largest mortgage provider. This marks a shift from the 0.3% increase recorded in February, prior to the escalation of tensions in the Middle East. The current average property price stands at £299,677, with annual price growth also showing signs of deceleration. Analysts suggest that the war in Iran has contributed to higher energy costs, fueling worries about inflation and potentially delaying interest rate reductions for the year.

Mortgage rates have surged recently, leading to the disappearance of numerous low-cost deals in the past weeks. The rate of deal withdrawals last month reached its highest level since the 2022 mini-Budget, which was introduced by then-Prime Minister Liz Truss. Despite this, Halifax noted that the recent rise in rates has not been as steep as the four-year trend observed previously. The lender’s insights highlight how market dynamics are being influenced by evolving geopolitical conditions.

“The current housing market slowdown is largely due to the uncertainty surrounding the Middle East conflict,” remarked Amanda Bryden, head of mortgages at Halifax. She further explained that expectations of higher energy prices have driven up inflation forecasts, which in turn have caused mortgage rates to climb. This has reduced confidence that interest rates will be cut this year, stifling the initial growth seen in the market at the start of the year.”

Bryden also emphasized that the duration of weaker demand will depend on how persistent these pressures remain and their broader effects on the economy and employment rates. The situation underscores the delicate balance between global events and local housing markets, as concerns over the Iran war continue to shape buyer behavior and financial decisions.