Britain’s housing market recorded its first monthly decline since December, with house prices falling in May as uncertainty linked to the conflict in Iran weighed on buyer confidence, according
to data released by Nationwide on Monday.
Average house prices fell by 0.6% month-on-month in May, marking the steepest monthly drop since June 2025 and exceeding economists’ expectations of a 0.2% decline, according to a Reuters poll.
Annual house price growth also lost momentum, slowing to 1.7% in May from 3.0% in April. The figure came in below forecasts for a 2.2% increase, highlighting growing pressure on the property market.
Robert Gardner, Nationwide’s chief economist, said the slowdown reflected heightened economic uncertainty stemming from developments in the Middle East.
“Given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates, some loss of momentum was to be expected,” Gardner said. “Consumer confidence has weakened noticeably since the start of the conflict.”
Mortgage costs have risen since the outbreak of the Iran conflict, as financial markets increasingly expect the Bank of England to raise interest rates later this year rather than cut them. Higher market borrowing costs have translated into more expensive mortgage deals for homebuyers.
Data from property website Rightmove showed the average two-year fixed mortgage rate stood at 5.13% and the average five-year fixed rate at 5.15% last week, both around half a percentage point higher than a year ago.
The broader housing market has also shown signs of weakness. The Royal Institution of Chartered Surveyors reported that its members recorded the most widespread decline in house prices since November 2023 in April, with subdued sales activity and sentiment, particularly in London and southern England.
Meanwhile, rival lender Halifax reported a 0.1% monthly fall in house prices in April, with annual growth slowing to just 0.4%.
The latest figures suggest the UK housing market is facing mounting headwinds as geopolitical tensions, rising borrowing costs and weaker consumer confidence dampen demand.
