UK annual house price growth slowed to 1.7% in May, from 3.0% in April, which represents the first monthly decline so far this year, Nationwide’s latest house price index reveals.
The index shows that house prices were down 0.6% month on month.
The average property price in May was £278,024.
Nationwide chief economist Robert Gardner says: “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.”
“Indeed, consumer confidence has weakened noticeably since the start of the conflict, with GfK’s headline index falling to its lowest level since late‑2023 in April, with only a marginal increase in May.”
“Measures of housing market sentiment have also deteriorated. The Royal Institution of Chartered Surveyors reported a sharp fall in new buyer enquiries in March, taking the index to its weakest reading since 2023 and remained deep in negative territory in April.”
Also commenting, Quilter financial planner Ian Futcher says: “The Bank of England has held rates for now, but the outlook remains uncertain. Much will depend on how the situation in the Middle East evolves and what that means for inflation and energy prices. Any sustained pressure here could yet force policymakers to rethink their path.”
“For now, we can expect the housing market to remain subdued. Higher energy costs are continuing to feed through to household budgets and affordability will be increasingly stretched, weakening consumer sentiment further.”
“What’s more, while mortgage rates have eased slightly from the peaks seen earlier in the year as lenders work harder to attract what is a limited pool of buyers, they are still elevated and we can expect them to be for some time yet.”
“That is likely to keep house price growth in check over the coming months. Buyers are becoming increasingly price sensitive as higher borrowing costs and wider financial pressures bite, which means any upward movement in prices will likely be modest.”
“Mortgage rates will continue to dictate the pace of the market in the months ahead. Swap rates are heavily influenced by global developments, and without a clear resolution to current tensions there is a risk they could edge higher again.”
Meanwhile, MT Finance deputy chief executive Gareth Lewis adds: “Values are under pressure and a significant volume are coming in lower than anticipated.”
“Nationwide’s figures reflect a softening housing market. From a lending perspective, we are seeing valuers cautious on value while buyers are looking for a steal and prepared to negotiate on price.”
Fine & Country managing director Nicky Stevenson comments: “A dip in May will feel like a change of tone after the spring uplift, but it’s not entirely unexpected given the backdrop.”
“Momentum was always likely to soften in the face of greater uncertainty, with higher fuel prices, and looming household energy bill hikes feeding into sentiment and market interest rates.”
“Importantly, this looks more like a pause than a reversal. Annual growth has cooled to 1.7%, but the market has proven remarkably resilient over the past few years, and many households are still in a relatively solid position.”
