The recent conflict in Iran has introduced a new layer of uncertainty to the UK housing market, prompting a leading estate agent to revise its price forecasts downwards. According to This is Money Mortgages, the outlook for 2026 now anticipates falling house prices, driven primarily by rising mortgage costs and subdued buyer demand.
Mortgage rates have increased steadily over the past year, pushing borrowing costs higher. This reduces affordability for many potential buyers and dampens the incentive to move, especially for those on variable or tracker mortgages facing larger repayments. The war in Iran has compounded this by contributing to inflationary pressures and economic instability, which in turn affects consumer confidence and spending power.
From a data perspective, our platform’s latest metrics show a slowdown in transaction volumes in key regions, especially among first-time buyers and those trading up. This aligns with the estate agent’s forecast and suggests that price corrections could be more pronounced in overheated markets such as London and the South East. Investors should prepare for a more cautious market environment where rental yields may become relatively more attractive than capital growth.
While some areas with strong local employment or limited supply may hold up better, the overall trend points to a cooling market. Those looking to buy should factor in the likelihood of price falls and higher financing costs when assessing investment returns. Sellers may need to adjust expectations accordingly, particularly if they rely on proceeds to fund onward purchases.
Source: https://www.thisismoney.co.uk/money/mortgageshome/article-15858007/House-prices-FALL-2026-war-Iran-fundamentally-changed-outlook-property-market.html?ns_mchannel=rss&ns_campaign=1490&ito=1490
