£794,000 £1,134,016 -7.4%
£627 £43.3bn 16,947
Source: Dataloft by PriceHubble, Bank of England, HMRC, ONS
MARKET ADJUSTMENT
The UK housing market remains resilient despite heightened uncertainty around the Iran conflict and rising borrowing costs. Sales agreed are relatively stable, with serious buyers and sellers continuing to transact, which should in turn support modest price growth.
CLOUDED OUTLOOK
UK inflation held at 3% in February, remaining above the Bank of England’s 2% target and unchanged month-onmonth¹. Economists had expected inflation to ease in the spring, but rising geopolitical risks in the Middle East and the impact on global energy markets could put upward pressure on inflation over next few months. The Bank of England voted to keep interest rates unchanged in March at 3.75%², however expectations have shifted notably from the prior meeting. The Bank is adopting a wait-and-see approach –while financial markets fear future rate increases, this latest round of inflationary pressures is coming at a time when the economy is weaker, potentially mitigating the need for higher rates.
BORROWING COSTS EDGE HIGHER
Average mortgage rates have risen by around 0.4 percentage points in recent weeks, with many sub-4% deals withdrawn as financial markets adjust to prospect of higher inflation³.
The five-year swap rate remains the key benchmark for mortgage pricing. Since the onset of the conflict this has risen; in March, it has averaged 4.4%, up from 3.8% in February4 . So far, the rise is modest compared with previous shocks, and rates remain below the peaks seen after the Liz Truss mini-budget and the mid-2023 inflation surge, when they briefly exceeded 5%.
CAUTION BUILDING
Mortgage approvals for house purchases rose to 62,584 in February, up 4% from 60,246 in January5 , marking the highest level in three months. This suggests activity was strengthening ahead of a potential slowdown linked to higher borrowing costs and the escalation in Iran. However, more recent indicators point to growing caution. The Royal
Institution of Chartered Surveyors reported a softening in buyer demand, as households weighed the impact of rising uncertainty.
SALES ACTIVITY
Despite weaker buyer demand, sales agreed remain relatively stable, just 2% below this time last year, indicating buyers who are already in the market are committed and progressing their purchases³. Transaction levels rose by 7% month-on-month in February, reaching their highest level since March 2025, again indicating that the market had been gaining momentum6 . This monthly increase indicates underlying demand, however rising inflation and interest rate uncertainty may weigh on activity in the months ahead.
MODEST GROWTH
House price growth remains relatively stable, rising on an annual basis to 2.2% in March, up from 1.0% in February7, suggesting the market had begun to regain momentum following the slowdown around the turn of the year. Another key factor shaping price trends is high level of homes for sale which is now at an 11-year high 8 . As a result, with affordability still stretched in some markets, sellers need to price their properties carefully to remain competitive. In England and Wales, the average price of a prime market property is £1,134,016, softened by 7% year-on-year. Looking ahead, price growth is expected to keep a measured pace, with current forecasts pointing to a 2.3% increase by the end of 20269 but the risks that this could be lower than expected have increased.
¹ONS, ²Bank of England, 3Zoopla, 4Investing.com, 5Bank of England, 6HMRC, 7Nationwide, 8Rightmove. 9HM Treasury, Average of Independent Forecasts
£550,000
£759,882 -2.5%
£352
£547,000
£735,700 +1.2%
£382
£584,000
£766,623 -0.5%
£381
£487,000
£630,312 +0%
£332
£725,000
£950,447 -6.1%
£467
£924,000
£1,286,553 -6%
£566
£425,000
£562,917 +1.2%
£300
£516,000
£686,056 +0.6%
£355
£529,000
£687,153 -3%
£335
£803,000
£1,081,891 -4%
£527
£1,470,000
£2,280,466 -14.3%
£1,150
£282,096
£794,000
£1,134,016
£230,704
£708,000
£1,042,446
Source: Dataloft by PriceHubble, Land Registry.
£277,547
£662,000
£901,858
£434,798
£1,020,000
£1,469,283
£228,146
£667,000
£1,011,964
£293,830 £807,000 £1,150,635