UK house price growth slowed sharply in September, with annual gains falling to their weakest level since the end of 2025 as higher mortgage costs and renewed economic uncertainty
weighed on the property market.
House prices increased by just 0.8% compared with September 2025, according to figures from Nationwide Building Society published on Thursday. The pace of annual growth was down significantly from 1.6% in August and fell short of the 1.3% increase expected by economists in a Reuters poll.
The monthly figures were weaker still. Average house prices fell 0.2% in September, contrary to economists' expectations of no change. The decline matched the fastest monthly fall recorded since May.
Nationwide chief economist Robert Gardner said both transactions and prices had remained subdued as households and investors faced an uncertain economic environment.
The latest weakness comes against a backdrop of heightened geopolitical tensions in the Middle East. The conflict in Iran has contributed to higher energy prices, adding to concerns that inflation could remain elevated for longer.
Although there have been indications that the increase in energy costs has not yet translated into broader underlying inflationary pressures, financial markets have nevertheless raised their expectations for further interest-rate increases from the Bank of England.
Higher interest rates would increase borrowing costs for households with mortgages and could further restrict demand for homes. Markets are currently pricing in a 0.25 percentage-point increase in Bank Rate in November, with another rise expected to be reflected in borrowing costs by February.
The housing slowdown presents an additional challenge for the government as it seeks to improve access to home ownership.
Prime Minister Andy Burnham has recently announced a new lending programme aimed at helping first-time buyers purchase homes with deposits as low as 2.5%. Under the proposed scheme, eligible buyers would be able to obtain loans covering up to 20% of a property's value.
The government is expected to provide further details of the programme in Chancellor John Healey's Budget later this month.
The initiative comes as affordability remains a major obstacle for prospective buyers. While a smaller deposit could help some households enter the market, higher mortgage rates can increase the cost of servicing a larger loan and may limit the impact of measures designed to stimulate demand.
September's figures therefore point to a housing market caught between government efforts to support buyers and financial conditions that continue to constrain borrowing. With interest-rate expectations moving higher and economic uncertainty persisting, the pace of house-price growth is likely to remain under pressure in the near term.
