LONDON, June 1 - British house prices fell by 0.6% in May, Nationwide reported on Monday, marking the first monthly decline since December and the largest single-month decrease since June 2025. The fall was steeper than the 0.2% decline forecast in a Reuters poll.
On an annual basis, prices rose 1.7% in May compared with a 3% year-on-year increase in April, coming in below economists' expectations for a 2.2% rise. Nationwide highlighted that momentum in the housing market has softened amid heightened economic uncertainty linked to the war in Iran.
"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," Nationwide chief economist Robert Gardner said. "Consumer confidence has weakened noticeably since the start of the conflict." His comments attribute part of the slowdown to elevated uncertainty and higher costs carried through markets into borrowing costs.
Average mortgage rates have risen since the onset of the Iran war, reflecting market pricing that now anticipates the Bank of England raising interest rates later this year rather than cutting them. Data released by Rightmove on Friday showed the average rate for a two-year fixed mortgage at 5.13% and a five-year fixed rate at 5.15%. Both figures are about half a percentage point higher than a year earlier.
Separate industry indicators also point to softer activity. The Royal Institution of Chartered Surveyors reported that its members recorded the most widespread falls in prices since November 2023 in April and described sales volumes and sentiment as subdued, with the effect most pronounced in higher-priced London and southern England.
Halifax, another leading mortgage lender, reported a 0.1% decline in house prices in April and noted that prices were only 0.4% higher than a year earlier.
The data underline a cooling in UK housing market momentum during May, with mortgage rate moves and geopolitical uncertainty cited as immediate influences on buyer sentiment and market activity.