Is the Iran War About to Crash the Property Market?

In this episode of the Scottish Property Podcast, Nick and Steven return for a market update, diving into one of the most uncertain global backdrops in recent years. From rising geopolitical tensions in the Middle East to mortgage rate volatility, inflation risks, and shifting investor sentiment, this episode breaks down what’s actually happening — and what it could mean for the UK and Scottish property market.

Alongside global events, the discussion also covers rental trends 📊, property price resilience 🏡, EPC regulation changes ⚠️, and the growing impact of AI on jobs and the wider economy. As always, the focus is on cutting through headlines and understanding what investors should actually pay attention to.

🎙️ Episode Highlights

🌍 Global Conflict & Its Impact on Property
• Rising tensions involving Iran, the US and global oil supply chains
• Potential disruption to 20% of global oil and gas supply via the Strait of Hormuz
• Oil prices rising sharply, increasing inflationary pressure
• Market uncertainty leading to hesitation from buyers and investors

📉 Mortgage Rates, Inflation & Market Sentiment
• Swap rates jumped from ~3.4% to 4.1% within weeks
• Over 600 mortgage products were pulled from the market
• Average mortgage rates now around 5.5%, a 19-month high
• Higher energy costs likely to push inflation back up
• Potential pause or reversal of interest rate cuts

🏡 Property Market Resilience vs Risk
• Scottish market remains strong with ongoing demand
• Average time to secure a buyer around 39 days
• Limited housing supply continues to support prices
• Main risk remains reduced lending and affordability
• Market may slow or stagnate rather than crash

📊 Rental Market Trends
• Rent growth slowing to ~1.8%–1.9% annually
• Average rent in Scotland around £878 per month
• Glasgow seeing stronger growth compared to other cities
• Affordability ceilings starting to limit further increases
• Strong demand remains due to housing shortage

🤖 AI, Economy & Future Risks
• AI rapidly replacing roles across multiple industries
• Businesses cutting costs by reducing staff through automation
• Rising unemployment seen as a bigger long-term risk than war
• Potential for stock market correction due to overvalued AI companies
• Economic shifts could impact property longer term

⚠️ EPC Changes & Government Policy Uncertainty
• EPC reform plans pushed back to at least 2027
• Proposed requirement for EPC band C still targeted for 2028
• Concerns over feasibility for older properties (tenements, sandstone buildings)
• Ongoing uncertainty makes it difficult for landlords to plan
• Investors advised not to make knee-jerk decisions

✅ Key Takeaways

• Global events can impact property indirectly through inflation and lending

• Mortgage rates can shift quickly based on market sentiment

• Scottish property market remains resilient due to lack of supply

• Rental growth is slowing but demand remains strong

• AI and unemployment may pose bigger long-term risks than geopolitics

• Interest rates are the key driver to watch for market movement

• EPC regulations remain uncertain — avoid reacting too early

• Opportunities can arise during short-term market slowdowns

• Strong fundamentals still support long-term property investing