The Middle East conflict continues to dominate housing market commentary as its impact begins to filter through into monthly reporting.
The latest Halifax House Price Index shows house prices were down 0.1% in May, following a similar fall in April. Average growth is up slightly to 0.5%, from 0.4% in April.
“Property price trends continue to reflect the uncertainty linked to developments in the Middle East”, said Halifax head of mortgages Amanda Bryden.
“Despite recent cuts to mortgage rates, higher inflation expectations have kept borrowing costs above the level seen at the start of the year, continuing to stretch affordability for many buyers and temper demand.
“Even so, overall activity has held up well, reflecting the underlying resilience of the UK housing market. Latest industry figures show transaction levels remain relatively stable, suggesting buyers and sellers are still moving.”
Anthony Codling, RBC Capital Markets managing director, said the figures reflect house prices “holding on by their fingertips”.
He added: “The Middle East conflict that erupted in late February has reset the macro backdrop: mortgage rates have risen, the Bank of England has shelved rate cuts, consumer confidence has weakened, and the spring selling season has disappointed.
“For housebuilders, this is not a crisis, but it is not a clean bill of health either. The sector entered 2026 with genuine hope; the Iran conflict has disrupted that narrative in a way that is hard to fully quantify but is clearly visible in share prices and consensus estimates.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said the impact of the Middle East conflict is “starting to make itself felt” on the ground.
“Most buyers are taking their time to try to ensure as far as possible they have found the right place and are not overpaying.
“As a result, prices are wobbling a bit and transactions are taking longer to complete, which is increasing fall throughs. We are finding though that some stability will certainly increase confidence in the medium to longer term.”
Despite the ongoing hit to conditions, estate agents report a steady supply of buyers.
“The housing market has become a marathon rather than a sprint, but buyers are still crossing the finish line,” said Marc von Grundherr, director of Benham and Reeves.
Yopa CEO Verona Frankish said the figures may not be breaking news, but the market remains stable. “A cooling market isn’t the same as a cold market”, she said.
“Whilst house prices have remained largely flat in recent months, the fact that mortgage approvals have climbed to their highest level in more than a year tells us that buyers are still very much engaged.
“Stability may not grab the headlines, but it’s exactly what the market needs after a prolonged period of volatility.”
Nathan Emerson, CEO of Propertymark, said the dip in prices highlights the ongoing impact of affordability pressures on buyer behaviour.
“Although demand has moderated, the market remains active, where sellers are willing to align pricing with local conditions. Buyers are becoming more selective, and professional guidance is increasingly important in helping transactions progress smoothly.”
According to Bryden, borrowing costs and consumer confidence are likely to continue shaping activity in the coming months, with house prices expected to be broadly stable while interest rates stay elevated.
She concluded: “The housing market remains closely tied to wider global developments, with a return to sustained house price growth dependent on an improvement in the inflation outlook and a fall in mortgage costs.”
