UK housing market falters after war breaks out in Middle East

12th Mar 2026 09:14

(Sharecast News) - The UK housing market faltered in February, a closely-watched industry survey showed on Thursday, as heightened geopolitical tensions weighed heavily on consumer confidence.

According to the latest residential market survey from the Royal Institution of Chartered Surveyors, new buyer enquiries were down sharply last month, while house prices nudged lower.

The house price balance dipped to -12 from -10 in January, while the new buyer enquiries balance slid to -26 from -15. Agreed sales were also notionally lower, softening three points at -12.

A balance is the weighted difference between those reporting a rise in prices and those seeing a fall.

Rics noted: "While some contributors point to a more encouraging start to the year in terms of activity, more recently this momentum appears to have been tempered by heightened geopolitical and macroeconomic uncertainty following the escalation of the conflict in the Middle East."

The survey showed expectations for house prices over the next three months had fallen notably, to -18 from -6.

The UK housing market ended 2025 on the back foot, weighed down by months of speculation in the build-up to the later-than-usual November Budget and a traditionally quieter December.

Conditions had started to pick up as 2026 got underway, supported in large part by expectations interest rates would fall during the year. However, inflation fears have picked up once again after oil and gas prices soared in response to the US attacks on Iran and the outbreak of hostilities across the Middle East.

The Bank of England meets next Thursday and is widely expected to leave the cost of borrowing unchanged at 3.75%; it had previously been forecast to trim rates. Mortgage rates have already inched up since the outbreak of war.

Tarrant Parsons, head of market research and analytics at Rics, said: "While activity indicators at the start of the year suggested a tentative improvement, the deterioration in the geopolitical backdrop has clearly weighed on confidence.

"The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer."

The survey, which covers 635 branches, was based on based on 287 responses. Data were received between 23 February and 9 March.