The $30 million toe in the water

Leading estate agent Savills has downgraded its UK house price forecast for 2026, now predicting a 2% decline after the Iran war disrupted energy markets and fuelled inflation, pushing mortgage rates higher and dampening buyer demand.

The estate agent and consultancy cited the war with Iran as having "fundamentally changed" the market outlook, after the conflict disrupted energy supplies and sent oil and gas prices higher.

That inflationary pressure has forced the Bank of England to reconsider its interest rate path , with lenders already raising mortgage costs.

A familiar pattern from the 2019 crash

The report warned that a longer war could lead to even worse outcomes, including a sharper rise in inflation and rates, followed by a more pronounced but short-lived V-shaped recovery.

Lucian Cook, head of residential research at Savills, noted that despite a robust start to the year, the rise in mortgage rates since late February has weakened demand and sentiment.

He added that regulatory pressures on landlords, forcing some to sell, have added downward pressure, especially in London and the South East, though improved affordability compared to recent years offers some offset.

Who is the unnamed buyer?

The findings echo other surveys, such as one from the Royal Institution of Chartered Surveyors, showing a subdued market.

With mortgage rates climbing due to war-driven inflation, borrowers are urged to seek the best possible deals and professional advice, whether they are first-time buyers, existing homeowners, or landlords.

Services like the fee-free brkoer L&C, partnered with This is Money, can help compare thousands of mortgage products to find suuitable options amid the shifting landscape.

What auditors flagged in the May filing

The report underscores how geopolitical shocks can quickly ripple through the economy, turning a once-bullish housing forecast into a bearish one almost overngiht.