A tentative two-week ceasefire between the US and Iran was announced on 8 April, according to multiple reports. The announcement saw oil prices fall and markets rally, but this relief proved short-lived as oil prices surged almost 7% after retaliatory Iranian attacks disrupted shipping in the Strait of Hormuz. The specific nature and duration of these attacks remain unclear, leaving markets on edge about the ceasefire's stability.
UK stock indexes were swept up in a global selloff on Monday due to the Middle East conflict, with the FTSE 100 closing down 1.2% and the FTSE 250 falling 1.4%, according to market data. British government bond yields rose as investors trimmed expectations for Bank of England interest rate cuts, reports indicate. British Airways operator IAG fell 5.5% after cancelling flights to Tel Aviv and Bahrain until March 3, according to company statements.
Shares in property firm Savills fell 7.98% on Thursday to 922p, market data shows. The company employs around 800 staff in the Middle East, but Savills said it is difficult to assess the impact of the conflict on its Middle East operations. Savills posted a pre-tax profit of £101m for the year to December 2025, up 14% from the year before, and has agreed to buy Eastdil Secured Holdings for $1.1bn (£827m), according to company reports.
The conflict in the Middle East is undermining business and consumer confidence, rattling housing markets, according to multiple reports. Lenders pulled hundreds of mortgage products within 48 hours of the outbreak of war, replacing them with more expensive deals, industry sources say. The Iran war prompted lenders to withdraw mortgage products, with the number of available deals having fallen by a fifth since hostilities began, according to mortgage data. Average US mortgage rates for a 30-year fixed deal stood at 6.37% last week, up from 5.98% before strikes on Iran began, according to major media sources.
Regional housing markets are feeling the strain, with Canterbury experiencing a notable slowdown. In Canterbury, only 47% of homeowners who asked for valuations in Q1 2026 went on to list their property, down from 68% in the same period in 2025, according to Andy Wicking, director of Charles Bainbridge estate agency. First-time buyers and those with small deposits are pulling out of the housing market in Canterbury, Wicking said, and prices are slumping, with sellers reducing asking prices to attract buyers.
The prime UK property market has seen significant declines, with the average price of prime countryside properties falling by 7.8% to £4.3 million in the last year, according to data from estate agents Savills. Homes in outer London fell by almost 2% to £1.8 million, according to major media reports. Sales of prime properties in London fell by 31% in February 2026 compared to the year before, according to property data firm LonRes, with the price of completed prime sales in London falling by 10% year on year. Sales of London homes worth more than £5m fell almost 55% in February compared to the same month last year, while the number of available luxury homes worth more than £5m in London grew by 10% in the 12 months to February, LonRes data shows.
The downturn extends internationally, with Dubai property prices slashed by over 25%, with some homes reduced by 26.7%, according to major media sources. Overall transactions in Dubai's property market were down by more than 50% in March 2026, new research indicates.
Survey data from the Royal Institution of Chartered Surveyors (Rics) confirms weakening conditions across the UK. A net balance of 39% of Rics professionals reported falling new buyer enquiries in March, the weakest reading since August 2023, with Rics members reporting buyer enquiries falling to the lowest levels since August 2023, and East Anglia and London seeing a noticeable deterioration. Rics members also reported the lowest levels of agreed sales since summer 2023. A balance of 23% of Rics professionals recorded house prices falling rather than rising in March, with London, East Anglia, the South East and the South West recording weaker price figures than the national average, while Scotland and Northern Ireland reported increasing prices.
The volume of unsold stock on estate agents' books climbed to an average of 47 properties, up from approximately 45 at the beginning of the year, Rics reported. Higher mortgage rates have hit the first-time buyer market, with only serious buyers with large deposits able to move, according to Cheryl La, a Rics member.
Forecasts and broader data point to continued pressure. House prices are expected to fall by 3% to 5% in 2026 due to the conflict, according to Deutsche Bank chief UK economist Sanjay Raja. Annual UK house price growth softened to 0.8% in March from 1.2% the previous month, Halifax data shows, with Northern Ireland leading UK annual house price growth at 8.7%, followed by Scotland at 4.4%. In the US, the number of homes sold in March fell by 3.6% from a month earlier to 3.98 million, the lowest level in nine months, according to the National Association of Realtors (NAR), though the median US home price rose 1.4% year on year to $408,800 in March.
Broader economic risks loom large, with the global GDP at risk from the Iran conflict estimated to be $3.5trn or 3.15% of global output if the Strait of Hormuz stays shut, according to research. A report by Swiss-Korean think tank SolAbility projects that many Gulf economies face a collapse in revenue, while a report by Oxford Economics predicts a long-term hit to multiple sectors of Gulf countries' GDP from the conflict.