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Housebuilder Persimmon has cautioned the Iran conflict could knock buyer sentiment amid fears interest rates will stay higher for longer if inflation is sent soaring.

The group said it was “monitoring the impact the conflict with Iran could have on our markets in 2026”, but flagged the potential for uncertainty to take its toll.

It said: “We have 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 in response to increased uncertainty.”

Persimmon said that it expected to deliver between 12,000 and 12,500 housing completions this year, although it added that this was “assuming the conflict with Iran and its impact is short”.

A raft of mortgage lenders have begun increasing their rates in anticipation that rising inflation caused by the Iran war will stop the Bank of England from cutting the base rate.

Some have predicted the Bank could even increase rates if rocketing oil prices lead to a spike back up in inflation.

The Bank had previously been widely expected to reduce rates when it next decides on March 19, but this is now looking off the table as fuel and energy costs are being sent soaring by disruption in the Middle East.

Persimmon said it was too early to say what impact the war could have on build costs, adding: “We would anticipate limited impact on the current year due to our existing agreements with key suppliers and our accelerated production levels coming into 2026.”

It said sales in the opening weeks of the year had otherwise been “strong”, with its net private sales rate up 9% year-on-year in the first nine weeks and average selling prices up 6%.

The firm’s private sales order book stood 9% higher at £1.25 billion as of March 1.

Dean Finch, group chief executive of Persimmon, said: “Sales in the opening weeks of the year have been strong and the build-to-rent market is recovering from the slowdown around November’s budget.

“Whilst 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.

“Assuming the conflict with Iran and its impact is short, Persimmon is set to grow again in 2026.”

The group’s full-year results showed pre-tax profits lifted 11% to £397.3 million in 2025 as new home completions rose 12% to 11,905.

On an underlying basis, pre-tax profits rose 13% to £445.6 million.

Persimmon said it is on track for 2026 expectations for underlying pre-tax profits to rise to £470 million, but this is based on a short-lived conflict in the Middle East.

Shares in the group bounced back by 7% in Tuesday morning trading, with the stock having joined rivals in suffering heavy falls in the past week on worries over the Iran conflict and the knock-on impact on the housing market.

Chris Beauchamp, chief market analyst at IG, said: “Last week’s panic over housebuilders seems misplaced, at least in Persimmon’s case.

“Revenue and profits are both up, assuaging fears about a renewed period of weakness for the group.

“While it hedged itself with some caution about confidence in this period of volatile energy costs, this is a solidly confident outlook, albeit dimmed slightly with the risk that the Bank of England has to slow its planned rate cuts until clarity appears on the path of interest rates.”