Data released on Monday by the Nationwide Building Society shows that UK house prices fell by 0.6% in May compared to the previous month. This marks the first monthly decline since December of last year, while the annual growth rate also slowed. The downturn is attributed to economic uncertainty stemming from the war in Iran dampening demand.
Nationwide indicated this is also the largest monthly drop since June 2025, exceeding the 0.2% decline forecast in a Reuters poll.
UK house prices in May were 1.7% higher than a year earlier, falling short of the 2.2% increase economists had expected and slowing from the 3% annual growth recorded in April.
Robert Gardner, Chief Economist at Nationwide, stated, "Given the uncertainty arising from developments in the Middle East and the consequent rise in energy prices and market interest rates, a moderation in house price growth was to be expected."
"Consumer confidence has clearly weakened since the outbreak of the conflict."
Since the onset of the war in Iran, average mortgage rates have continued to climb. This is because financial markets anticipate the Bank of England will raise interest rates later this year rather than cut them, thereby pushing up borrowing costs.
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