UK home prices returned to growth before war, official data shows

[LONDON] The UK housing market was picking up pace just before the Iran war dashed hopes of lower interest rates and dented sentiment, official data showed.

Average home values reached £269,296 (S$463,158) on a seasonally adjusted basis in February – an increase of 0.6 per cent after two months of declines, the Office for National Statistics said on Wednesday (Apr 22).

Prices were 1.2 per cent higher than the year-ago period and less than £1,000 short of their all-time peak.

The data, which tracks sold properties rather than the proposed prices used in some private-sector reports, showed that the housing market was starting to turn a corner after a choppy 2025.

That momentum is now set to fade, with traders betting that the Bank of England will have to raise interest rates to contain the inflation shock triggered by the Middle East conflict.

The most popular mortgage rates have risen by about a percentage point since the first US-Israeli strikes against Iran on Feb 28, personal-finance website Moneyfacts said, though data for Wednesday showed signs of rates having peaked.

Average two-year fixed loans eased from 5.87 to 5.83 per cent on Tuesday, with five-year rates falling from 5.76 to 5.73 per cent, it added.

The announcement of the data came as US President Donald Trump indefinitely extended a ceasefire with Iran, even with the naval blockade of the Strait of Hormuz still in place.

Property surveyors reported a sharp decline in the number of both agreed sales and prospective buyers in March, the Royal Institution of Chartered Surveyors said.

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Data from lenders since the conflict began painted a mixed picture. UK bank Halifax said house prices fell in March, while a Nationwide Building Society report showed a surprise increase.

Official Land Registry figures highlighted wide regional differences in the housing market in the past year.

London – where prices are more than twice the UK average – recorded the biggest drop, falling 3.3 per cent as increases in taxes and weaker overseas demand weighed on high-end sales.

Home values in cheaper regions rose, with Yorkshire and The Humber gaining 3.9 per cent and North East England increasing 3.5 per cent in the same period. BLOOMBERG