According to April 2026 data from HMRC, both residential and commercial property transactions fell compared with March, reinforcing concerns that the sector is entering a more prolonged slowdown.

While higher borrowing costs and weaker affordability have weighed on the market for some time, the emerging economic impact of the conflict in Iran is now creating additional uncertainty for investors, developers and buyers alike.

Heather Powell, Partner, said:

HMRC’s monthly property transactions figures for April 2026 are not happy reading. The number of both residential and commercial property sales are lower than those reported in March 2026.

Why geopolitical uncertainty matters to property markets

Property markets are highly sensitive to confidence. Buyers tend to delay decisions during periods of economic or geopolitical instability, particularly when concerns about inflation, energy prices or interest rates remain unresolved.

These figures are unlikely to improve. The negative impact of the war in Iran on buyer confidence can be expected to come through in the coming months. Property sales generally take 3-4 months from offer to completion; April’s statistics reflect opinions and optimism of buyers at the beginning of 2026 before the economic impact of the conflict began to be felt.

This lag effect is important for businesses across the property ecosystem. Developers, lenders, estate agents, construction firms and investors are all making decisions today based on conditions that may deteriorate further over the summer and autumn.

Housebuilding viability remains under pressure

Alongside weaker transaction volumes, the economics of housebuilding are becoming increasingly challenging. While the Government continues to prioritise planning reform and housing delivery, many developers argue that the underlying financial realities remain difficult.

Government ministers attending the UK Real Estate Investment and Infrastructure Forum (UK REiiF) in Leeds last week were keen to emphasise that they have improved the planning system. The key message from the delegates however was that increases in interest rates, significant increases in construction costs and a flat lining of sales prices means that many schemes are not viable. Developers will not build if they are going to lose money on a project, and bankers will not fund unprofitable schemes. Even those representing Government Funding need to be repaid.

This reflects a broader challenge facing the UK housing market: planning reform alone may not be enough to unlock new supply if market conditions continue to erode profitability.

For businesses operating in the sector, the concern is not simply reduced demand, but stalled investment decisions. Projects delayed today can create wider economic consequences tomorrow, from weaker construction activity to reduced local economic growth and ongoing housing shortages.

Government housing targets under increasing scrutiny

The Government’s ambition to deliver 1.5 million new homes during this Parliament is also coming under increasing pressure.

Although planning reform has dominated policy discussions, developers continue to argue that demand-side support may now be required to stimulate activity. Measures such as incentives for first-time buyers or changes to shared ownership schemes could help improve affordability and support transaction volumes.

Heather concluded:

If the Government is going to make significant steps towards it’s target of 1,500,000 new homes in the term of this Parliament it needs to look carefully at the best way to improve viability for house builders. This could be achieved by implementing incentives for first time buyers or reviewing the shared ownership rules. Currently the target of 1.5m new homes looks increasingly unachievable.

For policymakers, this raises a difficult balancing act. Supporting the housing market too aggressively risks reigniting inflationary pressures, while insufficient intervention could further weaken supply and affordability over the longer term.

What this means for businesses and individuals

For businesses, the current environment reinforces the need for cautious financial planning and realistic project assessments. Developers and investors may need to re-evaluate assumptions around sales values, build costs and financing conditions as uncertainty persists.

Lenders and property-related businesses should also prepare for slower transaction activity and potentially longer decision-making cycles among buyers and investors.

For individuals, affordability pressures remain significant. Higher mortgage costs, economic uncertainty and concerns around future house price growth may continue to dampen buyer appetite, particularly among first-time purchasers.

At the same time, constrained housing supply could continue to support prices in some regions, creating a market that remains challenging for both buyers and developers.

What you should consider next

Review exposure to rising financing and construction costs across existing or planned developments.

Stress-test business assumptions against slower sales rates and delayed completions.

Monitor interest rate expectations and geopolitical developments closely, as both are likely to influence market confidence.

Consider whether current projects remain commercially viable under different pricing scenarios.

For prospective buyers, assess affordability carefully and factor in potential volatility in mortgage markets.

Watch for possible Government interventions aimed at supporting first-time buyers or unlocking stalled housing developments.

Would you like to know more?

If you’d like to discuss the above, please speak to your usual Blick Rothenberg contact or Heather Powell using the form below.