Persimmon has warned that the conflict with Iran could knock UK homebuyer sentiment, amid growing fears of a jump in inflation and a prolonged period of elevated interest rates. The FTSE 100 housebuilder said it was monitoring the impact the conflict could have on its markets in 2026, noting that consumer sentiment could be sensitive amid increased financial uncertainty.
The company said it had 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. Persimmon expects to complete 12,000 to 12,500 houses this year, up slightly on 2025, but said this was assuming the conflict with Iran and its impact was short.
Major lenders including HSBC, Nationwide and Coventry are already raising rates on fixed mortgages, amid warnings that rising energy prices could push up UK inflation. This could force the Bank of England to keep interest rates higher for longer or even increase them. Policymakers had been expected to cut the base rate on 19 March, but investors now predict they will most likely hold it at 3.75% for the rest of the year, and could raise it to 4% next June.
Barclays, meanwhile, said UK consumer confidence had dropped since the war broke out. Its index fell by two percentage points to 23%, erasing gains made at the start of the year. The lender, which surveyed about 2,000 people after the first US-Israeli attacks on Iran, found that roughly four-fifths of Britons were worried the war would push up inflation, with most concerned about fuel costs, energy bills and food prices.
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 on building costs was not yet known, but it anticipated limited impact on the current year due to existing agreements with key suppliers and accelerated production levels. It reported strong house sales in the first nine weeks of the year, with net private sales up 9% year on year and average selling prices 6% higher. Chief executive Dean Finch 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.”
