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