UK Housing Market Defies War Fears

Asking prices for homes in the UK have seen an increase of £3,023, reaching £371,042 in the past month. This rise occurred despite ongoing geopolitical tensions, with buyer demand remaining stable since the onset of the Iran war.

However, this stability is contrasted by a significant increase in mortgage rates. Lenders are responding to global uncertainty, pushing average two-year fixed mortgage rates up to 4.51% in the week of March 9, a notable jump from the previous week.

Regions in the North of England, Scotland, and Wales are experiencing stronger annual price growth compared to southern England. The North West of England leads with a 2.6% annual increase, while London sees a 2.1% fall.

Properties typically sought by first-time buyers, such as studios and two-bedroom homes, have seen a slight price decrease of 0.4% nationally over the past year. Conversely, middle-market homes and larger properties have seen modest price growth or remained flat.

Affordability continues to be a critical factor, especially in more expensive southern areas where buyers struggle with deposits and income requirements. The North-South divide highlights the importance of accessible housing costs for market activity.

Overall housing costs in the UK reached a record high of £226 billion in 2025, with an annual increase of 3.6%. While total growth has slowed compared to previous years, the burden of higher mortgage costs is particularly felt by households transitioning from fixed-rate deals.