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, citing increased mortgage rates linked to the Iran war’s effects as a key factor in reduced demand. The UK’s leading mortgage provider noted that the average property price stands at £299,677, with annual price growth experiencing a slowdown.

The drop follows a 0.3% increase in February prior to the conflict’s onset, which caused energy costs to surge and sparked concerns about inflation rising without any interest rate reductions this year. Recent weeks have seen a sharp rise in mortgage rates, leading to the disappearance of numerous low-cost deals.

Last month marked the largest daily drop in mortgage deals since the 2022 mini-Budget, which was implemented under Prime Minister Liz Truss. However, Halifax indicated that the current surge in mortgage rates is less steep than it was four years prior.

“The recent slowdown in the housing market reflects the wide uncertainty regarding the conflict in the Middle East,” said Amanda Bryden, head of mortgages at Halifax. “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 also addressed the potential duration of weaker demand, stating it would “largely depend on how long-lasting these pressures prove to be and the wider implications for the economy and unemployment.”