Global unrest leaves the housing market on edge

A market on edge

The mood among buyers has shifted. With the Iran war clouding the outlook, estate agents report people growing nervous and keen to secure a mortgage now, in case borrowing costs climb later in the year. After a brisk start to 2026, the first signs of hesitation are showing.

It is a pattern playing out well beyond any one island or town: buyers who were content to take their time are moving to lock in deals, while some would-be movers have paused to see how the conflict plays out. Activity that surged earlier in the year has begun to cool as caution sets in.

Where the strain shows

Jersey offers a sharp illustration. Average house prices there fell 5% in the first quarter of 2026 compared with a year earlier, and with an average three-bedroom home around £695,000, agents say the typical couple can realistically afford only a one-bedroom flat. Estate agent Bradley Vowden, of Gaudin and Company, expects the next three to six months to be tougher as the conflict’s effects feed through — sales take six to eight weeks, and buyers are already “struggling to get mortgage offers”, with applications taking longer.

Fear versus the Bank’s signal

Much of the nervousness rests on a fear of steep rate rises — some in the market have talked of as many as six increases, or around 1.5%, in the latter half of the year. It’s worth separating that speculation from what the Bank of England has actually signalled. The Bank has held base rate at 3.75%, and Governor Andrew Bailey has said markets pricing in a run of rises are “getting ahead of themselves”.

The same caution showed on the mainland through the spring, when lenders pulled hundreds of low-deposit deals as fixed rates jumped. Uncertainty is real — but acting out of fear of a forecast the Bank itself is pushing back on can be its own kind of risk.

What it means if you’re buying or remortgaging

In a jittery market, the steady move is to base decisions on your own numbers rather than the loudest headline.