The number of new potential buyers registering in March fell 11% year-on-year in Britain, data from Knight Frank shows.
The broker said the decline was due to the ongoing war in the Middle East. Demand typically increases as spring approaches, but this figure compares to a smaller decline of 9% in February.
Before the war broke out, Knight Frank said housing activity had increased as buyers and sellers moved past uncertainty over the November budget.
Similarly, the number of offers issued fell 7% in March, compared to a 3% decline in February.
The picture is clouded by the introduction of higher stamp duty rates last April, which increased the number of transactions and potentially dampened new demand in March 2025.
In London, the number of new potential buyers fell by 6%, after rising by 1% in February.
Stuart Bailey, head of Knight Frank’s Prime Central London division, said: “March was slower than expected given the way the year had developed.
“It is too early to say whether demand will ultimately increase as a direct result of the conflict in the Middle East, but for now we have certainly seen more people coming to Britain to hedge their options with short-term rentals.”
Knight Frank added that the impact of the conflict in the Middle East on the UK housing market will be both sudden and gradual.
According to the broker, many buyers have mortgage offers below 4%, because offers are valid for a maximum of six months.
As such, higher financing costs will take longer to penetrate the real estate market, Knight Frank said.