The housing market in England and Wales is showing signs of weakening, influenced by the ongoing war in Iran, according to estate agents and recent surveys. Increased uncertainty around mortgage rate hikes and rising inflation have made potential homebuyers more cautious, while sellers are holding off on listing properties.
A monthly survey by the Royal Institution of Chartered Surveyors (RICS) reveals a “noticeable softening” in buyer demand throughout England and Wales. Tarrant Parsons, RICS’s head of market research and analysis, explained, “Until there is greater clarity on inflation and borrowing costs, both market activity and sentiment are expected to remain subdued, especially in southern England and London where affordability challenges are most pronounced.”
The survey found that a net 34% of property professionals reported falling house prices, an increase from 25% in March. This decline is most acute in London, the South East, East Anglia, and the South West. In contrast, northern England saw house prices remain marginally positive, with ongoing price rises reported in Scotland and Northern Ireland.
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Parsons noted that the market remains burdened by broader economic headwinds linked to the Middle East conflict. “The Bank of England’s recent warnings about potential interest rate hikes to combat inflation—fueled by high oil prices and disrupted supply chains—highlight the difficulties buyers face.”
The report also found that rising mortgage rates continue to suppress buyer demand, compounded by geopolitical uncertainties. A net 34% of professionals observed fewer new buyer inquiries, and agreed sales dropped, with 36% reporting declines. While expectations for sales in the near term remain subdued, outlooks improve slightly over a 12-month horizon.
Additionally, RICS warned that the flow of new listings may slow, as sellers remain hesitant in the current uncertain market.