A leading British housebuilder has warned the Iran conflict could knock homebuyer sentiment, amid growing fears of a jump in inflation and a prolonged period of elevated interest rates.
Persimmon said it was “monitoring the impact the conflict with Iran could have on our markets in 2026”, but noted that consumer sentiment could be sensitive amid more financial uncertainty.
“We have not assumed mortgage rate reductions or the introduction of any government demand stimulus, with the most important short-term factor being any changes to customer sentiment in response to increased uncertainty,” it said on Tuesday.
The FTSE 100 builder said it expected to complete 12,000 to 12,500 houses this year, up slightly on 2025, but that this was “assuming the conflict with Iran and its impact is short”.
Big lenders including HSBC, Nationwide and Coventry are already raising rates on fixed mortgages, amid warnings that rising energy prices could push up UK inflation. That could force the Bank of England to keep interest rates higher for longer or even increase them.
Policymakers at the Bank had been expected to cut the base rate at their next meeting on 19 March, but investors predict they will most likely keep it on hold at 3.75% for the remainder of the year, and could raise it to 4% next June.
Barclays also warned that UK consumer confidence had dropped since the war broke out. Its index, which tracks how confident people feel in the UK economy, dropped by two percentage points to 23%, erasing gains it made at the start of the year.
The lender, which interviewed about 2,000 people in the days after the first US-Israeli attacks on Iran, found that about four-fifths of Britons were worried that the war would push up inflation.
Most people were particularly concerned about fuel costs, energy bills and food prices, with about three-fifths of people worried about a blow to their personal finances, Barclays said on Tuesday.
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said: “The ongoing war in Iran and subsequent rise in oil prices have already made rate cuts less likely this year. That’s not helping buyer affordability, and it could be a while before external headwinds shift.”
Persimmon said the potential impact the war could have on building costs was not yet known, but added: “We would anticipate limited impact on the current year due to our existing agreements with key suppliers and our accelerated production levels coming into 2026.”
It said house sales in the first nine weeks of the year had been strong, with its net private sales rate up 9% compared with the same period in 2025, and average selling prices 6% higher.
Dean Finch, the Persimmon chief executive, said: “While we have good visibility of both our costs for 2026 and our demand from registered providers and build-to-rent, the impact of the Iran conflict on customer sentiment remains to be seen.”
