If the current two-week ceasefire in the Middle East holds, sentiment in the UK housing market is expected to improve, 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 continued pause in the conflict could support asset transaction levels, boosting activity that had slowed due to recent geopolitical uncertainty.
However, mortgage rates are unlikely to return to the low levels seen in February. With the ongoing economic impact of the conflict, increased inflationary pressures and the fragile financial position of the government, borrowing costs are expected to remain high. This means that while buyer confidence may increase, home price appreciation is likely to be limited due to lack of affordability, preventing a sharp market rebound.
As a result, the housing market may see steady activity rather than sharp increases in prices, with buyers and sellers navigating a period of cautious optimism due to persistent economic pressures.
Bill said: “If the two-week ceasefire in the Middle East holds, sentiment in the UK housing market will improve, which will support transaction levels when the spring market begins. However, mortgage rates will not bounce back in February due to the long-term inflationary effects of the war and the associated weakness of the government’s financial position, which will keep house prices in check.”
Bill’s views match the latest Royal Institution of Chartered Surveyors (RICS) The UK housing market survey for March 2026, published this morning.
The RICS report shows that the market is slowing down due to high borrowing costs and geopolitical uncertainty, which is affecting buyer confidence and sales activity. New buyer inquiries dropped to -39% of net balance, down from -29% in February – the weakest reading since August 2023. Agreed sales also declined sharply, falling from -13% to -34% last month.
The survey highlights the impact of inflationary pressures and rising mortgage costs. Short-term sales expectations fell sharply to -33% compared with -4% in February, indicating that respondents anticipate further weakness in activity in the coming months. Looking ahead 12 months, sales expectations dropped to -1%, indicating a broadly flat market rather than the slight improvement previously expected.
House prices also showed signs of softening. Headline value balances fell to -23% in March, from -14% in February and -10% in January, reflecting widespread downward pressure on values. Expectations for the next three months fell to -43%, while the 12-month outlook remained lower at +2%, pointing to limited overall growth in the year ahead.
Regionally, London, East Anglia, the South East and the South West reported weaker price readings than the national average, while prices continued to rise in Scotland and Northern Ireland. On the supply side, new orders remained low at -6%, with unsold stock rising to an average of 47 properties per agent, up from around 45 at the start of the year.
The rental market remains more resilient but reflects the ongoing imbalance between supply and demand. Tenant demand increased to a net balance of +10%, while landlord instructions remained negative at -25%. This imbalance is expected to continue pushing rents higher, pushing rental expectations up to +29% in the near term.
Overall, the March survey shows that the UK housing market has softened. Affordability pressures, rising financing costs and global instability are dampening activity. Although a severe recession is not yet forecast, the optimism previously seen in 2026 has largely faded.
Tarrant Parsons, head of market research and analysis at RICS, said: “The mood in the UK housing market has changed markedly over the past few months. What had been a picture of a cautious recovery for activity has been overshadowed by the wider macro fallout from the Middle East conflict, as a renewed downturn in the mortgage rate outlook has proved particularly challenging. Indeed, with average fixed rates climbing above 5% according to some sources, it is not surprising that buyer demand The path forward hinges on whether recent increases in oil and energy costs reverse in a highly uncertain geopolitical environment.
Christopher Clark at Eli Langley Gregg said: “It is impossible to know what is happening in the residential market at this time. 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 coming months and possibly years.”
Trevor Brown of Trevor Brown Surveyors commented: “Entering what are traditionally the strongest buy/sell months the market remains sluggish. Most of our [survey] Customers ‘have to move’ not ‘want to move’. National and international uncertainty remains and prices remain stable. Sales volume is reported to be low.
However, there is more positivity in the north of England, such as this statement from Tony Dobbins of Anthony Jones Properties in Darlington: “North East prices have increased by 2.8% year-on-year, outperforming the UK average of 1.3%. Mainstream demand remains solid; pricing discipline is required for premium stock above £400k. Rising mortgage rates are reducing early inquiries but committed movers. “Continue to transact in our area.”