Sentiment in the UK housing market is expected to improve if the current two-week ceasefire in the Middle East holds, offering a measure of stability for buyers and sellers as the spring market begins.
Tom Bill, head of UK residential research at Knight Frank, suggests that a sustained pause in conflict could support property transaction levels, encouraging activity that had been slowed by recent geopolitical uncertainty.
However, mortgage rates are unlikely to return to the lows seen in February. The ongoing economic impact of the conflict, combined with heightened inflationary pressures and the government’s fragile financial position, is expected to maintain higher borrowing costs. This means that while buyer confidence may rise, affordability constraints are likely to keep house price growth limited, preventing a rapid rebound in the market.
As a result, the housing market may see steadier activity rather than sharp increases in prices, with buyers and sellers navigating a period of cautious optimism underpinned by persistent economic pressures.
Bill said: “Sentiment in the UK housing market will improve if the two-week ceasefire in the Middle East holds, supporting transaction levels as the spring market gets underway. However, mortgage rates won’t snap back to where they were in February due to the longer-term inflationary impact of the war and the associated vulnerability of the government’s financial position, which will keep house prices in check.”
The survey highlights the impact of inflationary pressures and rising mortgage costs. Short-term sales expectations fell steeply to -33%, compared with -4% in February, indicating that respondents anticipate further weakening in activity over the coming months. Looking 12 months ahead, sales expectations eased to -1%, signalling a broadly flat market rather than the modest recovery previously expected.
House prices also showed signs of softening. The headline price balance fell to -23% in March, down from -14% in February and -10% in January, reflecting broader downward pressure on values. Expectations for the next three months dropped to -43%, while the 12-month outlook remained subdued at +2%, pointing to limited overall growth over the year ahead.
Regionally, London, East Anglia, the South East, and the South West reported weaker price readings than the national average, while Scotland and Northern Ireland continued to see price increases. On the supply side, new instructions stayed subdued at -6%, with unsold stock rising to an average of 47 properties per agent, up from around 45 earlier in the year.
The lettings market remained more resilient but reflected an ongoing imbalance between supply and demand. Tenant demand rose to a net balance of +10%, while landlord instructions remained negative at -25%. This imbalance is expected to continue pushing rents higher, with near-term rental expectations climbing to +29%.
Overall, the March survey suggests the UK housing market has shifted onto a softer footing. Affordability pressures, rising financing costs, and global instability are dampening activity. While a severe downturn is not yet forecast, the optimism seen earlier in 2026 has largely faded.
Tarrant Parsons, RICS head of market research and analysis, said: “The mood across the UK housing market has shifted markedly over the past couple of months. What had been a cautiously improving picture for activity has been knocked off course by the wider macro fallout from the Middle East conflict, as the renewed deterioration in the mortgage rate outlook has proved particularly challenging. Indeed, with average fixed rates climbing back above 5% according to some sources, it is unsurprising that buyer demand has softened.The path ahead hinges on whether or not recent surges in oil and energy costs begin to reverse in what remains a highly uncertain geopolitical environment.“
Christopher Clark, at Ely Langley Greig, said: “It’s impossible to know what is happening to the residential market at the moment. Only time will tell whether the Middle East conflict escalates or reaches a resolution, and the outcome of that war will determine how the market performs in the months and possibly years to come.”
Trevor Brown, of Trevor Brown Surveyors, commented: “Entering what has traditionally been the strongest buying/selling months the market remains sluggish. Most of our [survey] clients are ‘have to move’ not ‘want to move’. National and international uncertainty remains and prices are stagnant. Sales volumes are reported to be low.”
There is however more positivity in the North of England, such as this statement from Tony Dobbins of Anthony Jones Properties in Darlington: “North East prices up 2.8% annually, outperforming the UK average of 1.3%. Mainstream demand remains solid; premium stock above £400k requires pricing discipline. Rising mortgage rates are cooling early enquiries but committed movers continue to transact across our region.”
