MARKET IMPACT: why property sector outlook remains resilient

It is only a few short weeks since the outlook for the UK property market was becoming increasingly positive after the turbulence of previous years. Inflation had been steadily easing, raising expectations that the Bank of England might deliver another interest rate cut in the near future. With mortgage rates gradually improving and buyer confidence returning, the housing market in England was beginning to show signs of renewed momentum. Activity levels were picking up, more buyers were entering the market and there was a growing sense that 2026 could see a stronger period for property transactions.

Now, however, the outbreak of the Middle East conflict has quickly changed the economic landscape. While restrictions on oil supply, a potential consequence of the Strait of Hormuz becoming a chokepoint to tankers, may not appear to have a direct link to the housing market here in Portsmouth and Southsea, geopolitical conflict tends to create significant uncertainty in global money markets. And uncertainty is something the property sector typically responds to in turn.

If oil supplies remain restricted for any extended period, the cost of energy, transport and many everyday goods is likely to rise. This can filter through the wider economy, pushing inflation higher again. This reduces the likelihood of further base rate cuts from the Bank in the short term and, depending on how events unfold, could even lead to rates remaining on hold for longer or potentially increasing again.

Higher or sustained interest rates mean mortgages remain more expensive than buyers had hoped for earlier in the year. At the same time, rising living costs can reduce household affordability and confidence, which often slows buyer activity.

That said, property markets rarely stop completely. Despite the uncertainty caused by the war, the fundamentals of the property market here remain strong. Demand for housing in England continues to be underpinned by a shortage of supply and the simple fact that people will always need to move, whether due to growing families, job relocations or lifestyle changes.

While the pace of recovery in the market may be slightly slower than the very optimistic outlook seen earlier in March, the underlying demand for property remains. Buyers and sellers are still active, and the market is continuing to move forward.

In short, while global events may cause short-term caution, the long-term outlook for the housing market remains resilient. Property has historically proven to be a stable asset through periods of uncertainty, and the current environment is likely to be no different.

Let’s hope for peace sooner than later.

  Back