UK house prices fall as Iran war uncertainty dampens demand

UK House Prices Fall Amid Iran War Uncertainty

Halifax reported that UK house prices dropped by 0.5% in March, as rising mortgage rates tied to the ongoing Iran war reduced market activity. The average property price now stands at £299,677, with annual growth also decelerating, according to the UK’s largest mortgage lender. This decline follows a 0.3% increase in February, before the conflict began to elevate energy costs and spark concerns over inflation.

Mortgage rates have surged, causing hundreds of the most affordable deals to vanish in recent weeks. Last month marked the most significant daily withdrawal of deals since the 2022 mini-Budget under former Prime Minister Liz Truss. However, Halifax noted that the recent rate hikes have not reached the same intensity as those observed four years prior.

“The recent slowdown in the housing market reflects the wide uncertainty regarding the conflict in the Middle East,” stated Amanda Bryden, head of mortgages at Halifax. She added, “Concerns about higher energy prices have pushed up inflation expectations, which in turn led to a rise in mortgage rates, reducing confidence that interest rates will be cut this year and dampening the initial momentum in the market seen at the start of the year.”

Bryden emphasized that the duration of weaker demand would depend on how long these pressures persist and their broader impact on the economy and employment levels.