Knight Frank halves 2026 UK house price growth forecast to 1.5% as Middle East conflict keeps mortgage costs elevated

Knight Frank has halved its 2026 UK house price growth forecast from 3% to 1.5%, citing the Middle East conflict, weaker buyer sentiment and policy uncertainty. The five-year swap rate sits near 4% versus 3.5% before the war, keeping fixed-rate mortgages above pre-conflict levels. For buyers that means fewer cheap deals than spring promised; for sellers it argues for sharper asking prices now rather than waiting on a rebound. Prime central London is flagged for a 2% fall this year, though longer-term forecasts for 2029 and 2030 have been raised.