British house prices fall 0.6% in May amid economic uncertainty

British house prices fell by 0.6% in May compared with the previous month, while annual growth slowed to 1.7%, according to figures released by Nationwide Building Society on Monday.

The latest data showed house prices remained 1.7% higher than a year earlier, but growth eased from 3.0% recorded in April.

According to Nationwide's data, the seasonally adjusted house price index fell to 551.0 in May from 554.3 in April.

The average house price, on a non-seasonally adjusted basis, declined to £278,024 from £278,880 a month earlier.

First monthly decline of the year

Commenting on the figures, Robert Gardner, Chief Economist at Nationwide, said the housing market experienced its first monthly setback of 2026.

UK annual house price growth slowed to 1.7% in May, from 3.0% in April.

Prices fell by 0.6% month on month, after taking account of seasonal effects, the first monthly decline so far this year.

Gardner said the slowdown was not unexpected given the uncertainty surrounding recent geopolitical developments and their impact on financial markets.

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.

Housing market sentiment weakens

Gardner noted that indicators of housing demand have also softened in recent months.

“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 it remained deep in negative territory in April.”

The comments suggest that potential buyers have become more cautious amid broader economic uncertainty and higher borrowing costs.

The economy entered a period of uncertainty

Despite the recent weakness in housing market indicators, Gardner pointed to signs that the UK economy entered the latest period of uncertainty in relatively good shape.

“There has been some positive news in that the UK economy entered this shock on a slightly stronger footing than expected. The economy grew by a healthy 0.6% quarter on quarter in the first three months of the year, while inflation softened more than expected in April.”

However, he cautioned that the outlook remains uncertain.

“Nevertheless, economic growth is likely to be somewhat weaker and inflation higher than previously expected this year as a result of developments in the Middle East, although the impact will ultimately depend on the duration of the shock and the policy response.”

Gardner said the UK housing market has demonstrated resilience in recent years despite economic challenges.