New data from Connells suggests that the effects of the Iran War are gradually impacting the UK housing market.
The agency group – Britain’s largest – says most sales completed in March reflected activity before the war or in its very early days.
Therefore they suggest a market that appears to be weathering the storm.
But new instructions reflect the current situation and make difficult reading for agents.
“The clearest response to higher mortgage rates in March has come from sellers rather than buyers, with new instructions falling more sharply as confidence wavered.
“The number of new homes coming to market fell 7% year-on-year across Great Britain, the largest annual decline since April last year, shortly after the end of the SDLT holiday.”
It says most homes on sale have held their price relatively well but the scale of discounting continues to vary noticeably by price point.
Prime homes priced above £1m ssee the largest negotiations, with the typical property selling for around 3.5% below its final asking price in March.
However, it is the £500k–£1m segment that has experienced the biggest year-on-year increase in discounting.
In this upper-middle price bracket, homes sold for around 2% below their final asking price in March, compared with a 1% discount in March 2025.
Connells says: “This segment is disproportionately made up of movers – often families upsizing – who have been among the most exposed to the recent jump in mortgage rates.”
After a 2% year-on-year increase in February, applicant registrations across Great Britain fell back 4% in March.
However, Connells insists that in the context of the last few years, this remains a relatively measured pullback.
Even after March’s dip, applicant numbers are still 17% higher than in March 2019, indicating that underlying demand remains strong on an historic basis.
Aneisha Beveridge, Research Director at Connells Group, comments: “What unsettled the market in March wasn’t so much the level of mortgage rates, which are broadly back to where they were this time last year, but the rapid change in direction and pace at which borrowing costs rose.
“That sudden shift inevitably caught some buyers and sellers off guard and led to a dip in activity.
“Even so, the market has held up better than many feared.
“Buyer demand cooled modestly, but it didn’t fall away, and sales levels remained relatively resilient – helped by the fact that many households were already progressing with cheaper mortgage deals secured earlier in the year.
“First-time buyers saw the smallest rate increases and consequently accounted for the highest share of March purchases on record.
“However, the clearest response has come from sellers, where confidence softened more visibly and fewer homes were brought to market.
“As the boost from cheaper mortgage deals secured earlier in the year fades, activity may soften further in the near term while households adjust.
“However, financial markets have since stabilised.
“With fewer rate rises now expected, it should allow mortgage rates to ease back, albeit not to their level earlier in the year.
“If that pressure lifts, confidence is likely to rebuild.”
