UK house prices fell 0.6 percent last month, the largest monthly decline since June 2025, according to Nationwide data. Economists surveyed by Reuters had forecast a smaller 0.2 percent decrease. The drop marks the first monthly fall this year as rising mortgage rates linked to the Middle East conflict reduced buyer demand. The annual rate of house price growth eased to 1.7 percent in May from 3 percent in April, with the average property price now at £278,024. Knight Frank’s Tom Bill noted that the slowdown occurred when seasonal momentum would normally strengthen. He said higher borrowing costs would gradually reduce spending power and limit price growth through 2026, with the Bank of England expected to hold rates steady. Propertymark chief executive Nathan Emerson said stable prices would offer buyers and sellers greater certainty after recent volatility. He added that supply remains tight while many households continue to assess affordability carefully. Richmond estate agency head of sales Amy Reynolds observed that demand persists for well-priced quality homes, though buyers are selective and avoid overpaying. Nationwide chief economist Robert Gardner said affordability had improved in recent years through income growth and lower borrowing costs until recently. He noted that if the Middle East situation eases and energy prices stabilize, any near-term market softening should prove temporary. Consumer confidence has weakened since the conflict began, and housing market sentiment indicators have also deteriorated.
