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UK house price growth slowed sharply in May and prices fell on a monthly basis for the first time this year, as uncertainty stemming from the conflict in the Middle East weighed on consumer confidence, according to data from Nationwide Building Society on Monday. The Nationwide house price index showed annual house price growth eased to 1.7% in May from 3.0% in April. On a monthly basis, house prices fell 0.6%, reversing a 0.4% increase in April and marking the first monthly decline of 2026. It was a sharper fall than the FXStreet-cited consensus of a 0.2% contraction. The average UK house price stood at £278,024 in May, down from £278,880 in April. Nationwide Chief Economist Robert Gardner said the housing market had lost momentum amid rising energy prices and higher market interest rates following the war in Iran and the subsequent closure of the Straight of Hormuz. ‘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,’ Gardner said. He noted that consumer confidence has weakened significantly since the conflict began, with GfK’s headline confidence index falling to its lowest level since late 2023 in April and only recovering marginally in May. Housing market sentiment has also deteriorated, Gardner said, citing data from the Royal Institution of Chartered Surveyors showing new buyer enquiries fell sharply in March and remained deeply negative in April. Gardner said housing affordability has improved in recent years as income growth has outpaced house price growth and borrowing costs have moderated. While market interest rates have risen in recent months, he noted that swap rates, which influence fixed-rate mortgage pricing, ‘remain well below the highs reached in 2023 and are broadly in line with levels prevailing in 2024, implying only a partial reversal of earlier gains’. ‘This provides some confidence that, if the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short lived,’ Gardner said. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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