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Britain's housing market cooled last month as the Iran conflict and rising mortgage rates reduced buyer interest, according to RICS. House prices fell sharply, while new buyer demand and sales expectations dropped to multi-year lows. Temporary geopolitical developments provided brief relief in mortgage rates, but they remain elevated compared to pre-conflict levels. Meanwhile, rents continued to climb due to strong demand and fewer new landlord listings. Future housing trends will depend on how oil, energy costs, and geopolitical conditions evolve.
Britain's housing market showed signs of cooling last month as uncertainty from the Iran conflict unsettled potential buyers, according to a survey by the Royal Institution of Chartered Surveyors (RICS). Rising mortgage rates were cited as a key factor discouraging purchases. RICS monthly net balances for new buyer demand, sales expectations, and house prices all weakened notably, with house prices falling to -23 from February's revised -14, marking the sharpest decline since early 2024. Recent data from mortgage lender Halifax had also shown a significant drop in house prices. Advertisement
RICS reported that the net balance for price expectations over the next three months fell to -43 from -19, the lowest since August 2023. New buyer demand also declined sharply, reaching its lowest point in years. RICS head of research, Tarrant Parsons, explained that the previously cautious improvement in housing activity had been disrupted by the wider economic effects of the Middle East conflict and the worsening outlook for mortgage rates.
The temporary two-week ceasefire between the United States and Iran led to a noticeable drop in swap market rates, which influence mortgage lending in the UK. Despite this, mortgage rates remained significantly above levels seen in late February, prior to the outbreak of the conflict. Parsons noted that it was expected for buyer demand to soften given the current high mortgage rates and stressed that future housing activity would depend on whether recent spikes in oil and energy costs begin to ease amid ongoing geopolitical uncertainty.
Meanwhile, rental markets continued to show strength, with rents rising steadily. RICS recorded a balance of +25 for rent growth, driven by a reduction in new landlord listings (-25) and persistent demand for rental housing. New tenant protections against eviction and rent increases are set to come into effect next month, adding further complexity to the rental landscape.
Source Reuters
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