UK house prices record first monthly fall of 2026 – down 0.6% in May | Personal Finance | Finance

Property values ​​fell in May, according to an index, in the first monthly decline in house prices recorded so far this year. The average house price in the UK fell by 0.6% month-on-month in May, the Nationwide Building Society said, the first monthly decline since the 0.3% fall in December 2025.

Annual house price growth slowed from 3.0% in April to 1.7% in May. The average UK house price across the country in May was £278,024. Robert Gardner, Nationwide’s chief economist, said: “Prices fell 0.6% month-on-month, taking into account seasonal effects, the first monthly decline so far this year. Some loss of momentum was to be expected, given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates.”

Mr Gardner said there had been some positive economic news but added: “However, economic growth is likely to be slightly weaker and inflation higher this year than previously expected 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.”

Swap rates, which underpin fixed-rate mortgage pricing, remain well below the highs reached in 2023 and are generally in line with 2024 levels, indicating only a “partial” reversal of earlier gains, the real estate expert said.

“This provides confidence that if the latest shock passes relatively quickly and energy prices return to normal in the coming quarters, any near-term softening in the housing market will also be short-lived.”

OnTheMarket chairman Jason Tebb said: “The effects of the war in the Middle East are making themselves felt, with uncertainty and a challenging economic environment leading to market softening and some loss of momentum.

“However, the housing market continues to show resilience. Average prices have fallen on a monthly basis as focused, price-sensitive buyers bargain hard while sellers realize they will have difficulty selling overly priced homes.”

“This is the strongest ‘buyer’s market’ we’ve seen in many years and we have plenty of stock to choose from.”

Tom Bill, Knight Frank’s head of UK housing research, said: “This is further evidence that the housing market is slowing down just when you would expect it to gain momentum.

“There won’t be a cliff-edge moment, but the impact of higher borrowing costs will erode spending power and depress house prices this year as mortgage rates were agreed before the Middle East conflict faded away.”

Ian Futcher, financial planner at asset manager Quilter, said: “Mortgage rates will continue to set the pace for the market over the coming months.

“Swap rates are greatly affected by global developments and there is a risk of them rising again unless a clear solution is provided to current tensions.

“Rates are no longer rising sharply for those looking to buy or remortgage, but there is no clear path downwards either.

“In this environment, reviewing options early and maintaining flexibility, ideally with the support of a mortgage advisor, will put borrowers in a stronger position as the market continues to adjust.”

Martin Beck, chief economist at WPI Strategy, said: “Even as mortgage rates fall, the market remains fragile.

“Purchasing power remains strained, mortgage repayments consume a historically large share of household incomes, and a weakening labor market will pose a far greater threat to house prices than interest rates alone.”