Halifax: House prices fall by 0.5% amid Middle East conflict

UK property prices fell by 0.5% in March as the fallout from the US-Iran conflict hit the housing market.

The average house price dropped from £301,151 in February to £299,677 in March, according to the latest data from Halifax.

The lender put the slump down to the conflict in the Middle East, which has seen mortgage rates rise on fears inflation could accelerate over the coming months.

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Amanda Bryden, head of mortgages at Halifax, said: “The recent slowdown in the housing market reflects the wide uncertainty regarding the conflict in the Middle East.

“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.”

The pace of house price rises on an annual basis also went down from 1.2% in February to 0.8% last month as the market showed signs of slowing.

Some UK regions suffered more than others. Average house prices in the South East, where average values are higher, went down by 1.9% annually to £383,573 in March. In London, prices slumped by 1.2% to £536,751.

Strong house price growth is still being seen in the northern regions of England, where property values are lower.

The North East saw a 5% rise in the average price of a home year-on-year to £184,119 in March while the North West recorded annual growth of 3.1% to £247,442.

Northern Ireland continues to see house prices rise the most across the UK. In the year to March 2026, they surged by 8.7% to £224,809.

Scotland and Wales also recorded buoyant annual growth, with average prices up 4.4% and 1.6%, respectively. The average home in Scotland is worth £222,716 and £230,909 in Wales.

Credit: Halifax

What will happen to mortgage rates?

The latest monthly data from Halifax is one of the earliest signs of how the conflict in the Middle East is putting a stop on UK house price growth, according to experts.

Karen Noye, mortgage expert at wealth management firm Quilter, said: “March is the first full month in which the conflict in Iran fed through into UK mortgage pricing, making this data set an important early test of how higher borrowing costs are starting to affect the housing market.”

The US and Iran agreed a two-week conditional ceasefire on Tuesday 7 April, which sent oil prices plummeting and stocks rising.

However, the effective closure of the Strait of Hormuz off the coast of Iran since the start of the war in February, which led to oil, gas and fertiliser prices surging, is still likely to hit the housing market in the months to come.

Adam French, head of consumer finance at data firm Moneyfactscompare, said easing tensions in the Middle East would push down expectations for future interest rate rises, taking “immediate upward pressure off mortgage rates”.

However, mortgage rates “are likely to remain higher for some time yet”, he added.

“The volatility of the conflict can quickly move markets, which may leave many lenders cautious about making any sudden moves.

“The longer the ceasefire holds and markets calm, the more the mortgage market will stabilise, and rates could even begin to edge lower. But for now, it’s more likely to slow or pause increases rather than trigger any sharp falls.”