UK house prices fall as Iran war uncertainty dampens demand

UK house prices fall as Iran war uncertainty dampens demand

In March, the average price of UK homes declined by 0.5%, according to Halifax, with elevated mortgage rates fueled by the Iran war’s effects contributing to reduced demand. The average property price now stands at £299,677, while the annual growth rate has also decelerated, as noted by the UK’s largest mortgage lender.

This decline reverses a 0.3% increase recorded in February prior to the conflict’s onset, which had already spurred energy cost hikes, raising concerns about inflation and the potential for rate cuts this year. Over recent weeks, mortgage rates have surged, leading to the disappearance of hundreds of the most affordable deals. Last month marked the largest single-day withdrawal of mortgage options since the 2022 mini-Budget under Liz Truss’s tenure.

Halifax noted that the recent rate hikes have not reached the sharpness observed four years prior. Amanda Bryden, head of mortgages at Halifax, stated, “The current housing market slowdown is primarily due to widespread uncertainty surrounding the Middle East conflict. Higher energy costs have intensified inflation expectations, prompting mortgage rates to rise and diminishing confidence in potential rate cuts this year.”

Regarding the potential duration of this softened demand, Bryden indicated it “will largely depend on the persistence of these pressures and their broader economic implications, including unemployment trends.”