The impact of escalating tensions in the Middle East is beginning to filter through to the UK housing market with sales agreed volumes falling and transaction forecasts revised lower for the year.
New figures from TwentyEA show that the number of properties sold subject to contract (SSTC) fell by 8.1% in May compared with the same month last year, as higher energy prices, inflation concerns and mortgage rate volatility weighed on buyer confidence.
The property data firm has reduced its forecast for UK housing transactions in 2026 from 1.2 million to 1.13 million. While this would represent a 6.8% decline on 2025, it would still leave activity 2.6% higher than in 2024.
During May, SSTC volumes totalled 109,922 compared with 119,607 a year earlier. Demand weakened across all UK regions except Scotland, which avoided the impact of the stamp duty changes introduced in England and Northern Ireland last year. Inner London saw the sharpest decline, with sales agreed falling by 11.2%, followed by the North West at 6.7%.
NEW INSTRUCTIONS
Despite softer demand, supply continues to rise. TwentyEA recorded 794,210 new instructions in the year to the end of May, up 2.7% on the same period last year and the highest level on record. March alone saw more than 175,000 new properties come to market.
At the same time, transaction fall-throughs declined by 11.1% year-on-year to 115,025, with fewer sales collapsing across every price band.
Nick Huntley (main picture, inset), Director of TwentyEA, says: “This weakening of demand, seen particularly during May, points to a likely slowdown in transactions later in the year. As a result, we’ve revised our forecast to reflect a more challenging market backdrop.
“However, across the bigger picture, the market remains very resilient. Demand is still nearly 15% higher than in 2023 and remains ahead of 2024 levels despite the ongoing affordability pressures, geopolitical uncertainty and higher mortgage costs.
“That resilience reflects the determination of committed buyers, who continue to move even as the market conditions become less certain.”
STRONG SUPPLY
Huntley adds: “The positive story in the market right now is supply levels. We’re seeing the highest level of new instructions on record which is good news for buyers, who have more choice than at any point in recent years.
“What’s equally encouraging is that fewer transactions are failing with the decline in fall-through rates across all price bands suggesting a more determined market.
“We cannot overlook an 8% fall in SSTCs, however, for the year to date, transaction prices have so far remained broadly unchanged.”
