Month-on-month house prices fall 0.6%, the first monthly decline of the year
Nationwide has announced a slowdown of UK annual house price growth from 3% in April to 1.7% in May. On a month-on-month basis, house prices were down 0.6%, marking the first monthly decline of 2026.
Robert Gardner, chief economist at Nationwide, said that the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates meant that some loss of momentum was to be expected.
However, he said that both the UK economy and the housing market have proved resilient in recent years. “Household finances are solid, with total household debt at its lowest level relative to income for around two decades, and sizeable savings buffers have been built up, though these are not evenly distributed across households.
“Moreover, housing affordability had been improving steadily in recent years and while market interest rates have risen in recent months, the impact on affordability has so far been modest. This provides some confidence that, if the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short-lived.”
Careful decision-making
Nathan Emerson, CEO of Propertymark, said buyers were making careful decisions. “Stable house prices will be welcomed by many buyers and sellers looking for greater certainty in the market after a prolonged period of economic volatility. Buyers who need to move are continuing to act decisively, particularly where mortgage rates have stabilised, and supply levels remain constrained.
“Many households are continuing to carefully assess affordability before making decisions, particularly as mortgage costs remain higher than many borrowers have become accustomed to over recent years. However, steady pricing can help support confidence and encourage more balanced negotiations between buyers and sellers.”
Verona Frankish, CEO of Yopa, said: “It’s important to judge the health of the property market with a long-term view and the bigger picture remains one of stability, with house prices still higher than they were a year ago.”
Fragile confidence ahead
However, Chris Hodgkinson, managing director of House Buyer Bureau, said that whilst annual house price growth remains in positive territory, the latest figures suggest that market confidence is becoming increasingly fragile.
“When buyer demand starts to cool, the impact is often felt first through slower transaction times, tougher negotiations and an increase in fall-through rates rather than outright price declines. The market remains active, but sellers who fail to adapt their expectations to current conditions may find it considerably harder to secure a sale.”
Meanwhile, Tom Bill, head of UK residential research at Knight Frank, said he believed the latest index results are further evidence of the market cooling. “There won’t be a cliff-edge moment, but the impact of higher borrowing costs will erode spending power and squeeze house prices this year as mortgage rates agreed before the Middle East conflict gradually disappear. With the Bank of England likely to sit on its hands for the foreseeable future, we expect minimal house price growth in 2026, with uncertainty around the Budget and ideological direction of the government likely to keep a lid on activity.”
