UK house prices fall 0.6% in May as annual growth slows

UK house prices fell 0.6% month-on-month in May, and annual growth slowed to 1.7%, Nationwide Building Society reported Monday. The decline was the first monthly fall recorded in 2026.

The seasonally adjusted house price index dropped to 551.0 in May from 554.3 in April. On a non-seasonally adjusted basis the average price fell to £278,024 from £278,880 in April. Annual growth eased from 3.0% in April to 1.7% in May.

Robert Gardner, Nationwide’s chief economist, attributed the slowdown to uncertainty from recent developments in the Middle East and higher energy prices. He said those factors had pushed up market interest rates and weakened buyer demand, calling the result the housing market’s first monthly setback of 2026.

Measures of demand have softened in recent months. GfK’s headline consumer confidence index fell to its lowest level since late 2023 in April and rose only marginally in May. The Royal Institution of Chartered Surveyors reported a sharp drop in new buyer enquiries in March, leaving that survey in deeply negative territory in April.

Nationwide noted the UK economy grew 0.6% quarter-on-quarter in the first quarter and that inflation eased more than expected in April. Gardner cautioned the outlook remains uncertain and said growth could be weaker and inflation higher this year depending on the duration of Middle East disruptions and policy responses.

Nationwide added that the housing market has shown resilience through repeated shocks in recent years but is likely to face a sensitive period as buyers respond to higher costs and changing sentiment.