UK house prices edged up in March, but experts have warned that momentum could soften in the coming months as higher mortgage rates and increased economic uncertainty weigh on buyer confidence.
According to the Nationwide House Price Index, UK annual house price growth picked up to 2.2% in March from 1% in February.
Prices increased by 0.9% month-on-month, after taking account of seasonal effects.
Northern Ireland was the best performing area in the first quarter of 2026, with prices up 9.5% year-on-year. In contrast, the outer South East was the worst performing region, with prices down 0.7% compared with the first quarter of 2025.
Robert Gardner, chief economist at Nationwide, said: “The pickup in house price growth suggests that the market had regained momentum after the slowdown recorded around the turn of the year. However, the sharp rise in global energy prices in response to developments in the Middle East represents a significant shock to the global economy, clouding the outlook.
“In the near term, UK economic growth is likely to be slower and inflation higher than previously expected, although ultimately the impact will depend on the duration of the shock as well as the policy response. The outlook for interest rates is particularly uncertain and dependent on whether the demand or supply side of the economy is more adversely affected.”
Towards the end of March, three interest rate increases were priced in over the next twelve months, compared to two rate cuts being anticipated before the strikes on Iran. This shift has resulted in a sharp rise in longer-term interest rates that underpin fixed rate mortgage pricing.
Gardner added: “If sustained, this could reverse some of the improvement in housing affordability that has taken place in recent years. With consumer sentiment also likely to be dented by the uncertain outlook and the prospect of rising energy costs, housing market activity is likely to soften.”
Karen Noye, mortgage expert at Quilter, said: “Today’s figures capture the early stages of the repricing that has taken place in mortgage markets since the start of the Iranian conflict. While some resilience in house prices appears to have remained for now, momentum will likely soften in the months ahead as higher mortgage rates and increased economic uncertainty weigh on buyer confidence.
“Expectations of easing borrowing costs and gradually improving affordability had been supporting activity at the start of the year, but any real progress has been rapidly undone in the last month. Since the start of the conflict, mortgage rates have risen sharply and lenders have been withdrawing products or repricing fixed rate deals at short notice. For prospective home buyers and movers, this has meant a rapid deterioration in affordability.”
Noye said first time buyers are likely to feel this most acutely, but it also risks dampening activity further up the chain as existing homeowners delay moving plans in the face of higher borrowing costs.
Noye added: “The full effect of higher borrowing costs, weaker confidence and tighter household budgets will take time to feed through, but we can expect the housing market to be stuck in a holding pattern unless anything changes soon.
“For those with mortgages due to renew later this year, it is vital to act early.”
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, echoed the sentiment.
“The growth seen in March could prove to be the calm before the storm, if borrowing costs continue to climb in response to the latest geopolitical shock. Escalating tensions in the Middle East have upended inflation and interest rate expectations, something that could dampen demand if buyers find it harder to secure the mortgages they need.
With so much uncertainty, house price growth could come under pressure over the longer term if borrowing costs continue to climb and more households delay moving. While committed movers may still push ahead, sellers may need to price realistically to secure a sale as buyers face the dual challenge of higher borrowing costs and reduced purchasing power.”
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