UK house prices fall as Iran war uncertainty dampens demand

UK House Prices Decline Amid Iran Conflict Concerns

Halifax reported a 0.5% drop in average UK property prices during March, attributing the decline to rising mortgage rates fueled by the ongoing Iran war. This marks a shift from the 0.3% increase observed in February, prior to the conflict’s escalation, which had already begun to raise energy costs. The latest figures show the average house price standing at £299,677, with annual price growth slowing further.

The recent surge in mortgage rates has led to the disappearance of hundreds of affordable deals in recent weeks. This trend mirrors the significant withdrawal of financial products seen during the 2022 mini-Budget, which was criticized for its economic impact. However, Halifax noted that the current rate hikes are less abrupt than those experienced four years ago, suggesting a more gradual market adjustment.

“The current housing market slowdown is linked to the broad uncertainty surrounding the Middle East conflict,” explained Amanda Bryden, head of mortgages at Halifax. She added that worries about elevated energy prices have boosted inflation expectations, prompting higher mortgage rates. This has reduced optimism for interest rate cuts this year and tempered the early-year momentum seen in the market.”

Bryden emphasized that the duration of reduced demand will hinge on the persistence of these pressures and their broader effects on the economy and employment. While the Iran war’s fallout has temporarily stalled buyer confidence, the long-term impact remains uncertain.