Keep Calm and Keep Moving
Published 20 March 2026
The Bank of England held rates at 3.75% yesterday. Oil is above 100 dollars a barrel. Mortgage products have been withdrawn by the hundred. The temptation to freeze is understandable but freezing is a decision too, and the evidence suggests it is often the wrong one. Here is why the case for continuing with your property plans remains strong, and what practical steps will protect you regardless of how events develop.
The Market Has Not Stopped. Neither Should You.
There is a natural human instinct, when faced with uncertainty, to stop. To wait. To put plans on hold until the picture becomes clearer. It is the same instinct that led buyers to pause during the early weeks of the Covid pandemic in 2020, during the aftermath of the mini-Budget in 2022, and during the stamp duty uncertainty ahead of April 2025. In every single one of those cases, the people who waited longest paid the highest price, either through rising property values, higher mortgage rates, or both.
The current situation in the Middle East is serious. The conflict between the United States, Israel, and Iran has closed the Strait of Hormuz to meaningful shipping traffic, pushed Brent crude above 100 dollars a barrel, and sent shockwaves through global energy and financial markets. The Bank of England, which many analysts had expected to cut rates at its 19 March meeting, voted unanimously to hold at 3.75%. The Monetary Policy Committee warned that inflation, currently at 3%, could reach 3.5% in the third quarter of 2026 if energy prices remain elevated. Some members indicated that rate increases could not be ruled out.
These are real developments with real consequences for household budgets but they are not reasons to abandon a property transaction that is otherwise sound. The argument for continuing rests on several pillars, each of which is supported by data rather than optimism.
The Fundamentals Have Not Changed
The Supply Shortage Remains the Dominant Force
The single most important structural fact about the UK housing market is that there are not enough homes. Research from the Centre for Cities has established that Britain has a backlog of approximately 4.3 million homes that were simply never built, compared to the average European country. The government has committed to building 1.5 million homes over the course of this parliament, but new home completions in the twelve months to June 2025 reached just 201,049. Net additional dwellings in 2024 to 2025 stood at 208,600, a 6% decrease on the previous year. Savills has forecast that completions will reach only around 840,000 over the five years to 2028 to 2029, representing a shortfall of 42% against the government target.
This is not a supply problem that a conflict in the Middle East can fix. Population growth, constrained housebuilding, planning system bottlenecks, and a persistent shortage of skilled construction labour are structural features of the UK housing market that have been decades in the making. They will not be resolved by events in the Strait of Hormuz, however serious those events may be. As long as the imbalance between the number of people who need homes and the number of homes available remains as acute as it is, the fundamental support for property values persists.
Britain has a backlog of 4.3 million homes that were never built. A conflict in the Middle East does not change that arithmetic. |
Prices Are Not Falling
The Halifax House Price Index for February 2026 recorded average UK property prices at a record 301,151 pounds, with annual growth of 1.3%, the strongest rate in four months. Northern Ireland saw annual growth of 6.3%, Scotland 4.7%. Even the weaker southern markets, where the South East recorded a 2.2% annual decline, are experiencing modest correction rather than anything approaching a crash.
Rightmove's March 2026 data, published on 16 March, showed average new seller asking prices rising by 0.8% to 371,042 pounds, a typical seasonal increase. More significantly, Rightmove reported that sales agreed were running only 2% behind the strong market of the same period last year and were 5% ahead of 2024. New listings were 3% behind last year and 7% above 2024 levels. Buyer demand, while running below the busier 2025 market, had not fallen any further since the beginning of the Iran conflict.
The Royal Institution of Chartered Surveyors reported in February 2026 that a net 33% of contributors still expected house prices to be higher in twelve months, even after adjusting downward for geopolitical uncertainty. Capital Economics described its worst-case scenario, a 15% fall, as low probability.
These are not the characteristics of a market in freefall. They are the characteristics of a market that is absorbing an external shock while its underlying drivers remain intact.
Waiting Has a Cost. It Always Does.
Mortgage Rates Are Rising Now
Perhaps the most compelling argument for acting rather than waiting is what is happening in the mortgage market right now. The five-year SONIA swap rate, the benchmark that lenders use to price fixed rate mortgages, closed at 3.9% in early March, up from 3.5% before the conflict began. That is its highest level in almost a year. Major lenders, including HSBC, Nationwide, and Coventry Building Society, have already increased selected fixed rate products. The average two-year fixed rate has risen to 4.51%, up from 4.24% the week before.
Mortgage markets move faster in response to rising expectations than falling ones. If the conflict persists, if oil remains above 100 dollars, if inflation climbs toward 4%, the window of competitive fixed rate pricing that buyers enjoyed in late 2025 and early 2026 will not simply narrow. It will close. Deutsche Bank has warned that UK inflation could rise to nearly 4% by the end of 2026 in a prolonged conflict scenario, which would severely restrict the Bank of England's ability to cut rates. Some market participants are now pricing in the possibility of rate increases rather than cuts through to early 2027.
A buyer who waits three months for clarity may find that clarity comes with a mortgage rate half a percentage point higher than was available today. On a £250,000 mortgage over 25 years, that translates to approximately 75 pounds a month, nearly £900 a year, and over £22,000 over the life of the loan. That is the cost of waiting, and it is rarely factored into the calculation.
THE COST OF WAITING: A WORKED EXAMPLE A buyer who secures a £250,000 mortgage today at 4.5% over 25 years will pay approximately £1,390 per month. If rates rise to 5.0% over the coming months, the same mortgage will cost approximately £1,462 per month. That is an additional £72 per month, £864 per year, and £21,600 over the full term. Waiting for lower prices while mortgage rates rise can leave you worse off even if prices do fall. |
You Cannot Time the Market. Nobody Can.
It is worth stating plainly what every honest property professional knows, nobody can tell you with confidence what the housing market will do over the next six months. Not your estate agent, not your mortgage broker, not the analysts at Capital Economics or Knight Frank, and certainly not the commentators on social media who speak with the greatest certainty and the least accountability.
What we can say is that the historical evidence is overwhelmingly clear. Buyers who attempt to time the UK property market almost always lose. Those who delayed purchasing in 2013, waiting for a correction that never came, missed a period of significant price growth. Those who paused in 2020, expecting the pandemic to crash values, watched prices surge by 10% to 15% in parts of the country within eighteen months. Those who held back after the mini-Budget in 2022, expecting a sustained fall, found that the correction was shallow and short lived.
The UK housing market has a remarkable capacity to absorb shocks and recover. It has done so through the global financial crisis, Brexit, a pandemic, an energy crisis, and the fastest interest rate tightening cycle in a generation. The structural shortage of housing supply, combined with persistent demand from a growing population, provides a floor under prices that geopolitical events, however unsettling, have historically failed to breach for more than a few months.
Why Sellers Should Not Withdraw
The advice to sellers during periods of uncertainty is almost always the same, take your property off the market and wait for better conditions. This advice is understandable but usually wrong.
Rightmove's March 2026 data shows that stock levels are at an eleven year high for this time of year. The number of homes available for sale has been building throughout late 2025 and into 2026. That is a healthy feature of the market, giving buyers genuine choice and encouraging realistic pricing. But it also means that sellers who withdraw now and return in three or six months will re-enter a market with even more competition, at a point where any buyers who did pause are likely to have re-entered simultaneously, creating a brief surge of demand that quickly normalises.
The better strategy for sellers is to remain on the market, price competitively from the outset, and recognise that in a market with high stock levels, the properties that sell are those that are realistically priced, well presented, and marketed effectively. Rightmove noted that the average time to find a buyer is now the longest for this time of year since 2013, reinforcing the importance of competitive pricing rather than withdrawal.
Estate agents on the ground are reporting a consistent picture. Jeremy Leaf, a former RICS residential chairman, observed in March 2026 that his offices had seen no price reductions or withdrawals from agreed sales other than for property related reasons, despite the geopolitical uncertainty. Propertymark's chief executive Nathan Emerson described an encouraging start to the year, with resilience in the number of properties being listed and viewings being conducted.
Sellers who withdraw and return later re-enter a market with more competition, not less. The spring window is open now. Use it. |
The Bank of England Decision in Context
Yesterday's decision by the Bank of England to hold rates at 3.75% was widely anticipated following the outbreak of conflict. The unanimous vote to hold, combined with hawkish commentary from several MPC members, represents a meaningful shift from the trajectory that had been expected just weeks ago. The Bank warned that inflation could rise to 3.5% in the third quarter if energy prices feed through into the July Ofgem price cap, and some members indicated that rate increases could become necessary if inflationary pressures persist.
This is not comfortable reading for buyers or sellers. However context matters. The base rate at 3.75% is still significantly below the 5.25% peak that prevailed for much of 2023 and 2024. The four cuts delivered during 2025, bringing the rate down from 4.75% to 3.75%, have not been reversed. The Bank has not raised rates. It has paused, and it has done so because it is uncertain about the duration and severity of the conflict, not because the domestic economy has deteriorated in a way that would justify tightening.
Several analysts have noted that financial markets may have overreacted in the early days of the crisis. Michael Brown, research analyst at Pepperstone, observed that the market had lurched too far in one direction and would probably slowly but surely move back. ING economist James Smith suggested that a rate cut could still come in April if Middle Eastern tensions de-escalate rapidly. The picture is genuinely uncertain, but genuine uncertainty is not the same as certain decline.
Previous Conflicts and the UK Housing Market
The UK housing market has navigated geopolitical crises before, and the pattern is remarkably consistent. Short term sentiment is disrupted. Transaction volumes dip temporarily. Mortgage products are repriced. And then, within months rather than years, the market resumes its trajectory because the underlying drivers, supply shortage, population growth, and the fundamental human need for shelter, reassert themselves.
The first Gulf War in 1990 to 1991 coincided with a housing downturn, but that downturn was driven by the preceding credit boom and interest rates above 14%, not by the conflict itself. The Iraq War in 2003 produced no measurable impact on UK house prices, which rose by over 15% that year. Russia's full-scale invasion of Ukraine in February 2022 triggered an energy crisis and contributed to the inflationary pressures that led to aggressive rate rises, yet house prices, after a modest correction in 2023, stabilised and resumed growth in 2024 and into 2025.
The current conflict is different in its mechanics, the closure of the Strait of Hormuz is a more direct energy supply disruption than previous events, but the lesson from history is that the UK housing market's structural characteristics dominate its cyclical responses. External shocks create volatility, not collapse.
Practical Steps to Protect Yourself
FOR BUYERS Secure a mortgage offer now, even if you are not ready to exchange. A mortgage offer typically remains valid for three to six months, locking in today's rate as a fallback. If rates improve before you draw down, your broker can often switch you to a better product. If rates rise, you have protection. Stress test your affordability. Can you afford repayments if rates rise by a further 1%? Do you have emergency savings for the first year of ownership? If the answer is yes, the current environment should not prevent you from proceeding. If the answer is no that is a personal financial question, not a market timing one. Choose an independent conveyancer. In a market where uncertainty tempts some to cut corners or rush, having a conveyancer who works for you and only you is more important than ever. Ask directly whether they sit on any developer panel. Do not be rushed. Pressure to exchange quickly, particularly on new build properties, is not in your interest. Any professional who is genuinely on your side will understand that a few extra days to ensure your finances are sound is time well spent. |
FOR SELLERS Price competitively from day one. With stock levels at an eleven year high, overpriced properties are being overlooked. The data consistently shows that the first two weeks on the market are the most important. Get the price right at the outset and you maximise interest. Reduce later and you signal desperation. Stay on the market. Withdrawing and returning later means re-entering with more competition, not less. The spring selling window is a proven period of activity. Use it. Be realistic about timescales. The average time to secure a buyer is longer than in recent years. Factor that into your planning rather than interpreting it as a sign that the market has failed. Accept that buyers are cautious, and work with it. Buyers who are proceeding in the current environment are serious. They may negotiate harder on price, but they are far less likely to withdraw than a buyer who was motivated purely by fear of missing out. Quality of buyer matters more than speed of offer. |
What Could Change This Assessment
Intellectual honesty requires acknowledging the scenarios in which waiting might prove to have been the better choice. If the conflict escalates significantly beyond its current scope, if oil prices rise to and remain above 120 dollars a barrel for a sustained period, if the Bank of England is forced to raise rates aggressively to combat a genuine inflationary spiral, then the housing market would face headwinds beyond anything currently priced in.
Capital Economics has modelled a worst-case scenario in which the rise in mortgage rates consistent with a prolonged energy shock could lead to house prices falling by around 15%. The firm itself describes this scenario as low probability. It would require a combination of sustained high energy prices, aggressive monetary tightening, and a significant recession, a confluence of events that, while possible, is not the most likely outcome based on current intelligence.
The more probable scenarios, ranging from a rapid de-escalation to a prolonged but contained conflict, suggest a market that continues broadly on its current trajectory: modest price growth nationally, stronger performance in the more affordable regions, and a gradual adjustment to a slightly higher interest rate environment than had been expected before the conflict began.
The Bottom Line
The Middle East conflict has introduced genuine uncertainty into the UK property market. Mortgage rates have risen. The Bank of England has paused its cutting cycle. Energy costs are climbing. None of this is trivial.
However uncertainty is not the same as catastrophe. The structural foundations of the UK housing market, a chronic shortage of supply, persistent demand from a growing population, record low vacancy rates, and a long-term trajectory of price growth that has survived every geopolitical shock of the past fifty years, have not been altered by events in the Strait of Hormuz.
Buyers who are financially resilient, who have a genuine need to move, and who can secure competitive mortgage finance today have credible reasons to proceed. Sellers who are realistically priced and properly advised have every reason to remain on the market and take advantage of the spring selling window.
The greatest risk for most buyers is not that they buy at the wrong time. It is that they wait for a moment of perfect clarity that never arrives, while the costs of delay, rising rates, continued rent payments, lost equity, and missed opportunities, quietly accumulate.
Uncertainty is not the same as catastrophe. The structural foundations of the UK housing market have not been altered by events in the Strait of Hormuz. |
Key Market Data: March 2026
Indicator | Current Position |
Bank of England base rate | 3.75% (held, 19 March 2026) |
Average UK house price (Halifax) | £301,151 (February 2026, record high) |
Average asking price (Rightmove) | £371,042 (March 2026, +0.8% monthly) |
Annual house price growth | 1.3% nationally (Halifax) |
Brent crude oil | Above $100 per barrel |
Average 2 year fixed mortgage rate | 4.51% (up from 4.24% pre-conflict) |
Sales agreed vs 2025 | Only 2% below (5% ahead of 2024) |
Homes for sale | Eleven year high for this time of year |
UK housing backlog (Centre for Cities) | 4.3 million homes |
Next MPC decision | 30 April 2026 |
References
1. Bank of England, Monetary Policy Committee Decision, 19 March 2026 — Bank Rate held at 3.75%. Unanimous vote to hold. MPC statement on Middle East conflict, inflation forecasts revised upward. [bankofengland.co.uk]
2. Halifax House Price Index, February 2026 — Average UK house price reached record £301,151. Annual growth of 1.3%, the strongest rate in four months. Regional data: Northern Ireland +6.3%, Scotland +4.7%, South East -2.2%. [halifax.co.uk]
3. Rightmove House Price Index, March 2026 (published 16 March 2026) — Average new seller asking prices rose 0.8% to £371,042. Sales agreed 2% behind 2025 and 5% ahead of 2024. New listings 3% behind 2025, 7% above 2024. Stock levels at eleven year high. Average time to find a buyer longest for this time of year since 2013. [rightmove.co.uk/news/house-price-index]
4. Royal Institution of Chartered Surveyors (RICS), UK Residential Market Survey, February 2026 — Net 33% of contributors expected house prices to be higher in twelve months. Near term price expectations fell to net -18% from net -6% in January.[rics.org]
5. Capital Economics, UK Housing Market Update, 11 March 2026 — Worst case scenario of 15% house price fall described as low probability. Analysis of Middle East conflict impact on mortgage rates and housing market outlook. [capitaleconomics.com]
6. Knight Frank, Housing Unpacked Podcast, 6 March 2026 — Tom Bill, head of UK residential research, on conflict impact on housing market sentiment, mortgage rates, and price outlook. Featured analysis from Michael Brown, Pepperstone.[knightfrank.co.uk/research]
7. Centre for Cities, The Housebuilding Crisis: The UK’s 4 Million Missing Homes, February 2023 (updated) — UK backlog of 4.3 million homes compared to average European country. Analysis of planning system constraints on housebuilding.[centreforcities.org/publication/the-housebuilding-crisis]
8. Savills, Housing Completions Forecast for England, 2025 — Forecast of approximately 840,000 completions over five years to 2028/29, representing 42% shortfall against government target of 1.5 million. Analysis of housebuilding capacity constraints.[savills.co.uk/research]
9. RICS, What’s Holding Back House Building in the UK?, October 2025 — New home completions in twelve months to June 2025 were 201,049. Analysis of planning bottlenecks, skills shortages, and delivery constraints across UK regions.[rics.org/modus]
10. Ministry of Housing, Communities and Local Government, Housing Supply Statistics, March 2026 — Net additional dwellings in 2024/25 stood at 208,600, a 6% decrease year on year. New build starts up 24% year on year in latest quarter. 191,300 net additional homes delivered between April 2025 and March 2026. [gov.uk/government/collections/housing-statistics]
11. Propertymark, March 2026 Market Commentary — Nathan Emerson, Chief Executive, reported resilience in listings and viewings in early 2026. Member agents described encouraging start to the year despite geopolitical uncertainty.[propertymark.co.uk]
12. Deutsche Bank, UK Inflation and Rate Outlook, March 2026 — Sanjay Raja, chief UK economist, modelled three scenarios for Bank Rate based on conflict duration and energy prices. Warning that UK inflation could reach nearly 4% by end of 2026 if conflict is prolonged. [Reported via HomeOwners Alliance and IBTimes UK]
13. ING Economics, UK Rate Commentary, March 2026 — James Smith, economist, noted UK inflation could peak at 3.5% if energy prices remain elevated. Suggested next Bank of England cut could come in April if tensions de-escalate. [Reported via HomeOwners Alliance]
14. Pepperstone, Market Analysis, March 2026 — Michael Brown, research analyst, observed that swap rate markets had overreacted to early days of conflict and would likely revert. Featured on Knight Frank Housing Unpacked podcast. [Reported via Knight Frank]
15. Moneyfacts, Mortgage Market Data, March 2026 — Average two year fixed mortgage rate at 4.51%, up from 4.24% pre-conflict. Approximately 700 mortgage products withdrawn by lenders. [moneyfacts.co.uk]
16. Mortgage Finance Brokers, Weekly Market Update, 11 March 2026 — SWAP rates risen approximately 30 basis points over preceding week. Three scenario analysis for base rate trajectory: best case 3.25%, most likely hold at 3.75%, worst case 4.5%.[mfbrokers.co.uk]
17. LBC News, Bank of England Decision Report, 19 March 2026 — Coverage of MPC unanimous hold decision. Bank of England inflation forecast revised to 3% in Q2 2026 (up from 2.1%), potentially 3.5% in Q3. MPC members’ commentary on possible rate increases. [lbc.co.uk]
18. CNBC, European Central Bank Decisions Report, 19 March 2026 — Coverage of Bank of England, ECB, Riksbank, and Swiss National Bank all holding rates. Analysis of war in Iran impact on European monetary policy. [cnbc.com]
19. The Negotiator, Bank Holds Interest Rate Amid War Uncertainty, 19 March 2026 — Industry reaction to Bank of England hold decision. Buyer application levels reported 9% above 2025. Estate agent commentary on market resilience.[thenegotiator.co.uk]
20. Property Industry Eye, Industry Reacts to Bank of England Decision, 19 March 2026 — Compilation of estate agent and industry responses to rate hold. Commentary from Rightmove, Propertymark, and regional agents on market activity.[propertyindustryeye.com]
This article is intended as general guidance and does not constitute legal or financial advice. The property market, interest rate outlook, and geopolitical situation described reflect the position as at 20 March 2026 and may change rapidly. Please seek independent legal and financial advice before making any property purchase or sale decision.
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