UK house price expectations have deteriorated sharply, with the Royal Institution of Chartered Surveyors reporting its price forecast index fell to minus 18 in February from minus 6 the previous month. The decline reflects growing concerns about mortgage rates following the Middle East conflict, which has driven up oil and gas prices. Estate agents now expect prices to fall over the next three months, reversing recent recovery trends.

Mortgage rates have already risen, with the average 2-year fixed residential mortgage hitting 5.01 per cent, up from 4.83 per cent before the US attack on Iran. The Bank of England's interest rate decision next Thursday is now expected to keep rates unchanged at 3.75 per cent, with no cuts priced for the rest of the year. This marks a dramatic shift from pre-conflict expectations of two quarter-point rate cuts in 2026.

RICS survey data shows buyer enquiries also fell to a net balance of minus 26, while near-term sales expectations hit their lowest level since November. Estate agents report a sharp drop in activity since the conflict began, with one describing the market as "dead" since Iranian fighting started. The survey, covering the period after February 28, suggests the war has significantly dampened market confidence despite earlier signs of recovery.