UK House Prices Drop Below £300K — But Buying A Home Is Still Out Of Reach For Many

The average UK house price slipped back under £300,000 in March as the war between Iran, Israel, and the United States rippled through Britain's mortgage market, according to figures released by Halifax on Wednesday.

Values fell 0.5% on the month to £299,677 ($383,000), marking the first monthly decline of 2026. Annual growth eased to 0.8%, down from 1.2% in February and short of the 1.5% rise economists had pencilled in.

January and February had both recorded gains of 0.8% and 0.3%, respectively. March broke that run.

Middle East Tensions Add Pressure To UK Housing Market

Amanda Bryden, head of mortgages at Halifax, tied the cooling directly to the Middle East, the Guardian reported.

'The recent slowdown in the housing market reflects the wide uncertainty regarding the conflict in the Middle East,' Bryden said. 'Concerns about higher energy prices have pushed up inflation expectations, which in turn led to a rise in mortgage rates, reducing confidence that interest rates will be cut this year and dampening the initial momentum in the market seen at the start of the year.'

The conflict, which began on 28 February when the US and Israel launched coordinated strikes on Iranian military targets, has driven Brent crude well above $100 (£78) a barrel from around $70 (£55) before the fighting. Lenders have repriced fixed-rate mortgage deals in response.

Bryden pointed out that the rise in UK mortgage rates had been gentler than the spike triggered by Kwasi Kwarteng's September 2022 mini-budget, with many borrowers on existing fixed deals still insulated.

Tom Bill, head of UK residential research at Knight Frank, said the path back down would not be quick. Even if the current two-week ceasefire holds, he argued, the longer-term inflationary shock of the war meant mortgage rates would not snap back to where they sat in February. That, in his view, would keep demand and prices subdued for the rest of 2026.

Karen Noye, a mortgage expert at wealth manager Quilter, said changes in borrowing costs typically take time to show up in sale prices, with many households yet to feel the full impact.

North-South Split Deepens Across UK House Prices

The national average masks a widening gap between the north and south of the UK. Northern Ireland remained the strongest performer, with prices up 8.7% on the year to an average of £224,809 ($287,000). Scotland followed with an annual growth of 4.4%, taking the typical home to £222,716.

In England, the north-east led with a 5% annual rise to £184,119, while the north-west climbed 3.1% to £247,442.

The south moved in the other direction. Values in the south-east slid 1.9% year-on-year to £383,573 ($491,000), the sharpest regional fall. London recorded a 1.2% annual decline to £536,751 ($687,000), Investing.com reported.

Separate figures from HM Revenue and Customs offered a reminder that the market was holding up reasonably well before the latest shock. Seasonally adjusted residential transactions hit 102,410 in February, 5.6% above January's 96,940.

Halifax, part of Lloyds Banking Group, is the UK's largest mortgage lender. Its monthly index, running since 1983, is drawn from approved mortgage applications and is one of the most closely watched barometers of the British housing market.