Property investors are facing a fresh test of nerve after Halifax reported that UK house prices fell for a second consecutive month in April, with the lender pinning the slowdown squarely on the spike in borrowing costs triggered by the war in the Middle East.
The country’s biggest mortgage provider said the average home shed 0.1 per cent in value last month, following a 0.5 per cent drop in March. Annual growth halved to just 0.4 per cent, down from 0.8 per cent the previous month and well below the 0.6 per cent uplift economists had pencilled in.
Amanda Bryden, head of mortgages at Halifax, said the market had lost its early-year momentum as the Iran conflict rippled through the financial system. “After a strong start to the year, recent global developments have added a greater degree of uncertainty to the outlook,” she said. “In particular, higher energy prices have fed into inflation expectations, prompting markets to reassess the path for interest rates — a shift that has already pushed up borrowing costs for many buyers.”
The cooling sentiment is showing up across the chain. The Royal Institution of Chartered Surveyors recorded a sharp drop in new buyer enquiries during April, while housebuilders have flagged thinner traffic to both their websites and show homes as would-be purchasers hit pause on moving plans.
Investors hoping for relief from the Bank of England look likely to be disappointed. Threadneedle Street held Bank Rate at 3.75 per cent last week, but the swaps market is now pricing in two further quarter-point rises by the end of 2026 as policymakers grapple with imported inflation from the energy shock.
Yet the picture is far from uniform. Nationwide, which uses a slightly different methodology, reported a fourth consecutive monthly gain in April, lifting its measure of the average property to a fresh record of £278,880, up 0.4 per cent on the month.
Ashley Webb, UK economist at Capital Economics, suggested the Halifax reading was probably the more honest reflection of conditions on the ground. “The housing market has been less resilient to the jump in mortgage rates triggered by the Iran war than the alternative Nationwide measure implies,” he said. “Even if the Strait of Hormuz re-opened fully soon, we suspect the drag on prices from the rises in mortgage rates we’ve already seen will continue to grow in the coming months.”
Tom Bill, head of UK residential research at Knight Frank, said the squeeze on values would build gradually rather than arrive in one hit, because many buyers are still drawing down pre-conflict mortgage offers. “The recent spike in mortgage rates will only put gradual downwards pressure on house prices as more favourable offers that pre-date the Middle East conflict take several months to lapse,” he said. He expects modest growth to resume by year-end, conflict permitting.
For listed property plays, the message from Rightmove was characteristically cool-headed. Britain’s dominant online property portal reaffirmed its full-year guidance, sticking with revenue growth of 8 to 10 per cent and underlying operating profit growth of 3 to 5 per cent for 2026. Average revenue per advertiser, the engine room of the business, also pushed higher, though the company declined to publish a figure.
“We continue to monitor the impact from volatile global macro conditions, including interest and mortgage rate expectations, as well as overall consumer and partner confidence,” Rightmove said.
For portfolio landlords and investors, the takeaway is that the next few months are likely to favour the patient. With mortgage pricing still working through the system, transaction volumes thinning and the Bank of England in no rush to cut, buyers with cash or pre-agreed finance may find themselves negotiating from an increasingly strong position.
