The prospect of lower mortgage costs may be getting further away due to the Iran conflict, Halifax has warned.
It comes as the latest Halifax House Price Index for February showed monthly house price growth slowed to 0.3% from 0.8% in January but was at a four month high annually of 1.3%.
This put average UK house prices at £301,151.
Regional differences in house price performance remain significant, with a clear split between stronger growth in the North and softer conditions in the South, Halifax said.
Northern Ireland continues to lead the UK, with average prices up 6.3% over the past year to £218,608. Scotland also recorded strong growth, rising 4.7% annually to an average price of £222,286.
Elsewhere, Wales saw a more modest increase of 2.4% on an annual basis, taking the typical home value to £231,637.
Within England, stronger price growth remains concentrated in northern regions. The North East saw prices rise 3.5% over the year to £181,838, while the North West recorded annual growth of 2.9%, with the average home now costing £246,292. In contrast, the more expensive southern markets continue to see prices ease. The South East led declines, with prices down -2.2% year‑on‑year to £383,834, while London saw average values fall by – 1.0% to £538,200.
Amanda Bryden, head of mortgages at Halifax, said: “These latest figures suggest the market has regained some momentum after a softer end to 2025. While industry data for January show a slight easing in new mortgage approvals, overall activity has continued to prove resilient.
“There’s no doubt that affordability remains stretched, supply is constrained, and regional disparities persist. For those without family support, the path to home ownership feels particularly challenging.
“However, conditions have been gradually improving, with easing interest rates and real wage growth helping to support buyer confidence. As ever, timely and expert advice remains key to helping more people achieve their goal of stepping onto the property ladder. “Looking ahead, geopolitical uncertainties seem set to influence the outlook for inflation and the wider economy. Against that backdrop, markets are now anticipating a more gradual path for interest‑rate reductions. If realised, the speed at which borrowing costs ease may be tempered.”
Commenting on the index, Tom Bill, head of UK residential research at Knight Frank, said: “Momentum in the housing market had been rebuilding after November’s Budget and the outlook for mortgages was brighter only a week ago.
“However, a prolonged conflict in the Middle East would dampen sentiment and delay rate cuts due to rising inflation, which would put downwards pressure on prices.
“That said, we have seen how quickly interest rate expectations can change this year, and the underlying weakness in the jobs market is one of several reasons that multiple cuts could come back onto the table in 2026, which would support demand. A lot hinges on the length of the conflict.”
