- UK house prices fall for first time this year as market loses momentum.
- Annual house price growth slowed to 1.7 per cent from 3.0 per cent in April.
- Analysts say higher borrowing costs and global uncertainty are weighing on demand.
Britain's housing market recorded its first monthly setback of the year in May, with house prices slipping as economic uncertainty and higher borrowing costs began to weigh on buyer confidence.
According to the latest Nationwide House Price Index, average UK house prices fell by 0.6 per cent compared with April, marking the first monthly decline since December 2025. Annual house price growth also slowed, easing to 1.7 per cent from 3.0 per cent a month earlier. The average home was valued at £278,024 in May.
The figures suggest the UK housing market may be entering a softer phase after months of steady growth, although economists and property experts believe broader conditions remain relatively resilient.
Clouds gather over the market
Robert Gardner, Nationwide's chief economist, reportedly said some loss of momentum had been expected given the uncertainty created by developments in the Middle East, which have pushed up energy prices and market interest rates.
While economic growth has remained positive, Gardner reportedly said rising inflation and increased uncertainty could make conditions more challenging in the months ahead.
Even so, he argued that household finances remain in relatively good shape. Household debt as a share of income is close to its lowest level in around two decades, while many households built up savings buffers in recent years.
Gardner also noted that housing affordability had gradually improved as wage growth outpaced house price growth and borrowing costs eased from previous highs. Although market interest rates have risen recently, he reportedly said mortgage pricing remains well below the peaks seen in 2023.
He added that if energy prices stabilise and geopolitical tensions ease, any slowdown in the housing market could prove temporary.
Buyers gain the upper hand
Property experts say the latest figures point to a market that is becoming increasingly favourable for buyers.
Jason Tebb, president of OnTheMarket, reportedly said uncertainty linked to the conflict in the Middle East had contributed to a softer market and reduced momentum.
However, he suggested buyers remain active, with many taking advantage of increased choice and negotiating power. Sellers, meanwhile, are being forced to price homes more realistically as competition for buyers intensifies.
"This is the strongest buyers' market we have seen in many years," Tebb reportedly said.
Tom Bill, head of UK residential research at Knight Frank, also pointed to signs of a slowdown emerging at a time when the housing market would normally be gathering pace.
He reportedly said higher borrowing costs are likely to gradually reduce spending power as older, cheaper mortgage deals expire, putting additional pressure on house prices later in the year.
For now, the market appears caught between two competing forces: households that remain financially resilient and a growing sense of caution driven by global events, inflation concerns and borrowing costs. How long the current cooling period lasts may depend largely on whether those economic pressures begin to ease in the months ahead.
