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Economy
Apr 12, 2026

Iran Conflict Dampens UK Housing Market as Sellers Face Despair

AI Summary
The ongoing conflict in Iran has significantly impacted the UK housing market, causing lenders to pull mortgage products and leading to a decrease in buyer confidence. Sellers are struggling, with some properties seeing price reductions of up to £75,000. The market was showing signs of recovery before the conflict escalated, but now experts warn that interest rates are unlikely to fall quickly.

The UK housing market is experiencing a downturn due to the Iran conflict, which has led to increased uncertainty and fear among buyers and sellers. This conflict has resulted in lenders pulling hundreds of mortgage products within 48 hours of the war's outbreak, replacing them with more expensive deals.

As a result, buyers and sellers are having second thoughts, with some pulling out of deals altogether. The mood in the market is one of 'fear and uncertainty,' according to Andy Wicking, director of the Charles Bainbridge estate agency in Canterbury.

In the first three months of this year, just 47% of homeowners who asked Wicking to value their property went on to list it, a significant drop from 68% in the same period in 2025. Wicking notes that owners are still asking for valuations but not acting on them.

At the bottom end, first-time buyers and those with the smallest deposits and least experience of riding out a turbulent market are pulling out. Wicking says, 'The chains falling down at the lower end, they're the really cautious ones.'

For those who do make it to market, prices are slumping. A house valued at £600,000 may now go on at £575,000 to get buyers through the door. Surveyors are increasingly down-valuing properties too.

The conflict has also led to a rise in interest rates, with the average two-year fixed-rate mortgage standing at 5.90% on Wednesday, up from 4.83% at the start of March. Nearly a million homeowners are due to come off five-year fixed deals this year, with those who have secured new deals paying an average of £94 more a month.

The timing of the conflict couldn't be worse for owners who usually bring their homes to market after hunkering down for the winter. As Brian Swint, an independent mortgage broker, notes, 'It's the fear.'