This UK Housing Market Scenarios Chart Pack builds on the analysis and scenario forecasts published in the Global Property Outlook (see here) to provide more detail on how the Iran War could influence the UK housing and rental markets.
If the ceasefire holds and energy prices stabilise, the rise in mortgage rates since the start of the Iran war may mean house prices rise by close to 1.5% in the year to Q4 2026 as in our baseline scenario. But in a more adverse scenario where the conflict resumes and lasts for at least another three months, house prices may increase by just 0.5% in the year to Q4 2026. In the rental market, softer pay growth in our baseline scenario than in our pre-war forecasts is consistent with market rents rising by about 2.5% this year (2.8% previously). In an adverse scenario, stronger earnings growth due to second-round effects may mean market rents grow by a bigger 3.5%.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services