- A leading UK housebuilder says the Iran conflict could affect homebuyer sentiment in 2026.
- Mortgage rates are already rising as lenders react to inflation fears.
- Consumer confidence in the UK has slipped since the war escalated.
The Iran conflict is beginning to cast a shadow over the UK housing market, with one of Britain’s largest housebuilders warning that rising geopolitical tensions could shake buyer confidence.
The company said it is closely monitoring how the conflict may influence housing demand in 2026. While the situation has not yet been factored heavily into its outlook, it suggested that homebuyer sentiment could become fragile if global uncertainty continues to rise.
The builder said it had not assumed any reductions in mortgage rates or new government support schemes for buyers when setting its expectations. Instead, it believes the key short-term risk lies in how buyers react to economic uncertainty.
“The most important short-term factor being any changes to customer sentiment in response to increased uncertainty,” the company reportedly said in a news report.
It expects to complete between 12,000 and 12,500 homes in 2026, slightly higher than in 2025. However, the forecast assumes that the Iran conflict does not escalate or drag on for a long period.
Mortgage rates creep up again
The warning comes as mortgage rates in the UK start to edge higher again. Major lenders including HSBC, Nationwide and Coventry Building Society have already raised rates on some fixed mortgage deals.
The changes follow rising energy prices and broader inflation concerns linked to tensions in the Middle East. Economists have suggested that if inflation begins to climb again, the Bank of England may have little room to lower interest rates.
Investors had previously expected the Bank to cut the base rate at its March 19 meeting. Market expectations have shifted in recent weeks, with some now predicting the rate could remain at 3.75 per cent through the year and possibly rise to 4 per cent by June 2027.
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said the conflict and rising oil prices were already shaping expectations around interest rates.
“The ongoing war in Iran and subsequent rise in oil prices have already made rate cuts less likely this year,” Chiekrie reportedly said in a news report. “That’s not helping buyer affordability.”
Confidence dips as households worry about costs
Fresh data suggests consumers are already feeling uneasy. Barclays said its latest survey showed UK consumer confidence slipping after the war began.
The bank’s confidence index dropped by two percentage points to 23 per cent, wiping out gains seen earlier in the year. The survey was conducted among about 2,000 people in the days following the first US and Israeli strikes on Iran.
According to Barclays, nearly four-fifths of respondents said they were concerned the conflict would push inflation higher. Many pointed to worries about fuel prices, energy bills and food costs.
Around three-fifths also said they feared the situation could damage their personal finances, Barclays reportedly said in a news report.
Despite the uncertainty, the housebuilder said sales activity has remained relatively strong so far. In the first nine weeks of 2026, its net private sales rate rose 9 per cent compared with the same period in 2025, while average selling prices increased 6 per cent.
Chief executive Dean Finch said the company has clear visibility on building costs and demand from housing providers and rental investors.
However, the broader market reaction remains uncertain. The impact of the Iran conflict on customer sentiment, Finch reportedly said in a news report, is still difficult to predict.
