According to Nationwide’s House Price Index for May 2026, UK house prices fell by 0.6% from the previous month
UK annual house price growth slowed to 1.7% in May, down from 3.0% in April, amid growing uncertainty over rising interest rates and energy prices due to the conflict in the Middle East.
On a monthly basis, house prices fell 0.6%, reversing a 0.4% increase in April and marking the first monthly decline of 2026.
Moreover, May’s average house price was £278,024, a steady decrease from £278,880 in April.
Consequences of Middle East war have weakened buyers’ confidence
Nationwide Chief Economist Robert Gardner said the housing market had lost momentum amid rising energy prices and higher market interest rates following the war in Iran and the subsequent closure of the Straight of Hormuz.
“Given the uncertainty caused by developments in the Middle East and the subsequent rise in interest rates and energy prices, some loss of momentum was expected,” he explained.
He noted that consumer confidence has weakened significantly since the conflict began, with GfK’s headline confidence index falling to its lowest level since late 2023 in April and only recovering marginally in May.
Housing market sentiment has deteriorated throughout 2026
Housing market sentiment has also deteriorated, reflecting data from the Royal Institution of Chartered Surveyors showing new buyer enquiries fell sharply in March and remained deeply negative in April.
It’s important to look at the bigger picture amidst changes in UK house prices
However, housing affordability has improved in recent years as income growth has outpaced house price growth and borrowing costs have moderated.
“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,” stated Verona Frankish, CEO of Yopa.
“Whilst we may have seen a marginal decline in property values on a monthly basis, this is unlikely to materialise into a long-term trend given we’re now entering peak selling season when the market really heats up.”
Chris Hodgkinson, managing director of House Buyer Bureau, added: “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.”
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