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Home costs softened in Might, with the primary month-to-month dip in property values recorded to this point this yr, based on an index.
The common UK home worth dipped by 0.6% month-on-month in Might – the primary month-on-month fall since a 0.3% lower in December 2025 – Nationwide Constructing Society mentioned.
Annual home worth progress slowed to 1.7% in Might, from 3.0% in April.
Throughout the UK, the typical home worth in Might was £278,024.
Robert Gardner, Nationwide’s chief economist, mentioned: “Costs fell by 0.6% month-on-month, after taking account of seasonal results – the primary month-to-month decline to this point this yr.
“Given the uncertainty attributable to developments within the Center East and the next rise in power costs and market rates of interest, some lack of momentum was to be anticipated.”
Mr Gardner mentioned there was some optimistic financial information, however added: “Nonetheless, financial progress is prone to be considerably weaker and inflation greater than beforehand anticipated this yr because of developments within the Center East, though the affect will finally rely on the length of the shock and the coverage response.
“The UK economic system and housing market have proved remarkably resilient lately.
“Family funds are strong, with complete family debt at its lowest degree relative to earnings for round 20 years, and sizeable financial savings buffers have been constructed up, although these are usually not evenly distributed throughout households.
“Furthermore, housing affordability had been bettering steadily lately on account of a mixture of earnings progress outpacing home worth progress by a large margin and a modest decline in borrowing prices.
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“Whereas market rates of interest have risen in current months, the affect on affordability has to this point been modest.
“Certainly, swap charges, which underpin fastened‑fee mortgage pricing, stay properly beneath the highs reached in 2023 and are broadly according to ranges prevailing in 2024, implying solely a partial reversal of earlier beneficial properties.
“This offers some confidence that, if the most recent shock passes comparatively shortly, and power costs normalise within the quarters forward, any near-term softening within the housing market will even show short-lived.”
Jason Tebb, president of OnTheMarket, mentioned: “The fallout from the struggle within the Center East is making itself felt, with uncertainty and the difficult financial backdrop leading to a softening available in the market and a few lack of momentum.
“That mentioned, the housing market continues to exhibit resilience. Common costs dipped on a month-to-month foundation as targeted, price-sensitive patrons negotiate onerous, whereas sellers realise that they may battle to promote over-ambitiously priced properties.
“That is the strongest ‘patrons’ market’ we’ve seen in a few years, with loads of inventory to select from.”
Tom Invoice, head of UK residential analysis at Knight Frank, mentioned: “That is additional proof that the housing market slowed down at exactly the time of yr while you would anticipate momentum to be constructing.
“There received’t be a cliff-edge second, however the affect of upper borrowing prices will erode spending energy and squeeze home costs this yr as mortgage charges agreed earlier than the Center East battle progressively disappear.”
Ian Futcher, a monetary planner at wealth supervisor Quilter mentioned: “Mortgage charges will proceed to dictate the tempo of the market within the months forward.
“Swap charges are closely influenced by world developments, and with no clear decision to present tensions there’s a danger they might edge greater once more.
“For these trying to purchase or remortgage, charges are now not rising sharply, however neither is there a transparent path downwards.
“On this surroundings, reviewing choices early and protecting flexibility, ideally with the help of a mortgage adviser, will put debtors in a stronger place because the market continues to regulate.”
Martin Beck, chief economist at WPI Technique, mentioned: “Even when mortgage charges edge decrease, the market stays weak.
“Affordability remains to be stretched, mortgage repayments take in a traditionally giant share of family incomes, and a weakening labour market would pose a a lot better menace to deal with costs than rates of interest alone.”
