UK house prices fall as Iran war uncertainty dampens demand

UK House Prices Decline Amid Uncertainty Over Iran Conflict

Halifax reported a 0.5% decrease in average UK house prices during March, marking a shift from the 0.3% rise observed in February. This decline comes as elevated mortgage rates, influenced by the Middle East conflict, have begun to affect buyer demand. The current average property price stands at £299,677, with annual price growth showing signs of slowing.

Recent weeks have seen a significant rise in mortgage rates, leading to the disappearance of hundreds of the most affordable deals. This trend echoes the dramatic withdrawal of deals recorded during the 2022 mini-Budget under former Prime Minister Liz Truss, though Halifax noted that the current rate increases are less abrupt than those seen four years prior.

“The housing market’s recent slowdown is driven by growing concerns over the Middle East conflict,” said Amanda Bryden, head of mortgages at Halifax. “Rising energy costs have heightened inflation expectations, which in turn have pressured mortgage rates. This uncertainty is dampening confidence that interest rates will be cut this year, reversing the initial momentum seen at the start of the year.”

Bryden emphasized that the duration of this weakened demand will depend on how long the conflict’s economic impacts persist. She also highlighted the broader implications for unemployment and the overall economy, suggesting that these factors could influence the market’s trajectory in the coming months.