UK house prices fall as Iran war uncertainty dampens demand

UK house prices fall as Iran war uncertainty dampens demand

Halifax reported a 0.5% decline in average UK house prices during March, marking a shift from the 0.3% increase observed in February. The current average property price stands at £299,677, with annual price growth also slowing, according to the UK’s largest mortgage lender. This downturn follows the initial upward trend in the housing market before the conflict began, which raised concerns about inflation and potential interest rate hikes.

Mortgage rates have risen sharply in recent weeks, causing hundreds of the most affordable deals to vanish. The previous month saw the highest daily withdrawal of mortgage products since the 2022 mini-Budget, which was criticized for its economic impact. However, Halifax noted that the recent rate increases are less steep than those seen four years ago, suggesting a more gradual market adjustment.

“The current market slowdown is driven by widespread uncertainty surrounding the Middle East conflict,” said Amanda Bryden, head of mortgages at Halifax. “Higher energy prices have elevated inflation expectations, leading to mortgage rate hikes that are reducing confidence in potential rate cuts this year and slowing the market’s initial momentum.”

Bryden added that the persistence of weaker demand will depend on how enduring the pressures from the conflict and its broader economic consequences remain. Factors such as inflation and unemployment are expected to play a critical role in determining the market’s recovery trajectory. While the situation is concerning, Halifax remains cautious about the long-term implications of these challenges.