UK’s property market stays resilient amid inflation and geopolitical tensions

The US-Iran war in West Asia and the resulting trade blockades have increased inflation, driving up energy costs and mortgage rates in the UK. However, the property market has remained resilient, showing steady growth and positive buyer sentiment, largely unaffected by global uncertainty.

Key highlights from April 2026

• Average new seller prices rise by 0.8%, slightly short of the long-term April average.
• Average earnings are up by 3.9% than last year.
• The average two-year fixed mortgage rate rises to 5.42% from 4.25%.
• The UK inflation rate has risen to 3.3%.
• ONS reports average rents up by 3.4%.

Asking prices continue to move upward

While Zoopla reported a 1.3% increase in average UK house prices earlier in March, Rightmove’s latest House Price Index in April reported a 0.8% increase in the average new seller asking price. This price growth is despite mortgage rates rising and the supply of new homes being at an 11-year high in the UK. Although buyer demand is 7% and the number of sales agreed is 3% below this time last year, these figures are consistent with this year’s trend of trailing 2025.

London is most expensive despite the slowdown

At £680,147, the average house price in London was marginally down by 0.1% in April. However, prices in the capital are still nearly 82% above the national average of £373,971. Among London Boroughs, Kensington & Chelsea recorded the best monthly performance, with average prices increasing by 3.1%, followed by Harrow and Richmond upon Thames, which recorded 2.3% growth. Sutton and Haringey also recorded growth of 2% and 1.7% respectively.

Mortgage rates go up as inflation rises

Rightmove’s daily mortgage tracker shows that the average two year fixed rate
has risen to 5.42%, from 4.25% before the start of the war in Iran. This increase means that the average instalment on a new mortgage has increased by around £235 per month. Although mortgages have become expensive, a typical mover is also now able to borrow more, due to last year’s review of the Loan-to-Income cap.

The UK rate of inflation also rose to 3.3% in March, driven largely by higher fuel costs due to the war’s impact on global oil prices.

Better wages and price corrections boost affordability

Average earnings in the UK are up by 3.9% compared to last year, outpacing the average asking price on residences, which are down by 0.9%. Our latest research also revealed an increase in seller activity as buyer demand has picked up, leading to over a quarter (26.8%) of current residential property listings in London undergoing a sale.

Upcoming international property showcases, events and consultations

Following the successful launches of The Orien in Hong Kong and Wimbledon Bridge House in Malaysia in April, our international offices are all set for new launches this May. While our teams in India gear up for new launches and consultations in Delhi and Bangalore, our Singapore office will unveil the new phase launch of The Grove Collection at Woodberry Down. Meanwhile, our Taiwan office will showcase TwelveTrees Park.

Rent growth stabilises in a price-sensitive market

According to the Office for National Statistics (ONS), the average monthly private rent in the UK was up by 3.4% to £1,377 in the 12 months to March 2026. This is a 0.2% drop from the previous month’s report. While rents in the North East reported the highest inflation, London reported the lowest rental inflation of 1.7%.

Despite a slowdown in growth, average rents in the capital, at £2,280, are still nearly 66% more than the national average, making it the most expensive region to rent. Many experts have cited that London rents have reached an affordability ceiling, limiting explosive growth. Among London Boroughs, Kensington & Chelsea reported the highest monthly average of £3,600.

Rental demand cools as supply increases

According to Zoopla’s rental market report for Q1 2026, there are currently 11% more homes to rent than a year ago, while the demand for rental homes is down by 14%, and is at its lowest level in six years. A dip in migration levels has also hit demand, with the number of enquiries per property falling to an average of 4.8 from 6.5 a year ago. The average time to find a tenant has also increased to 20 days from 18 days last year.

Benham and Reeves is a leading estate and lettings agent with a London-wide network of branches and several international offices. We bring you the latest and best new-build property developments in the UK capital and also offer a range of buying, selling, letting and property management services to help boost your investment.

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