UK House Prices Fall Unexpectedly: Nationwide

(RTTNews) - UK house prices dropped unexpectedly in September as energy price pressures linked to geopolitical tensions fuel rate hike concerns, data from the Nationwide Building Society revealed Thursday.

House prices fell 0.2 percent on a monthly basis in September, offsetting a 0.2 percent rise in August. Prices were forecast to remain flat.

On a yearly basis, house price growth halved to 0.8 percent from 1.6 percent in the previous month, marking the weakest growth since December 2025. Economists had forecast an annual growth of 1.3 percent.

In the third quarter, house prices were down 0.4 percent from the prior quarter but increased 1.2 percent from the previous year.

Nationwide's Chief Economist Robert Gardner said housing market activity remained subdued in recent months due to the uncertain economic conditions.

The conflict in the Middle East exerts upward pressure on energy prices, fanning inflation concerns, he noted.

"This in turn has led to mounting financial market expectations of Bank Rate increases, which has maintained upward pressure on the market interest rates which underpin mortgage pricing," said Gardner.

However, there are no signs of higher energy prices feeding through to underlying price pressures.

Gardner said underlying affordability is improving, as house price growth has been well below earnings growth for some time. These gains were only partially offset by higher mortgage rates.

"This suggests that activity should regain momentum in the quarters ahead providing the energy shock fades and confidence returns - especially if market interest rates fall back to pre-conflict levels," said Gardner.

Last month, the Bank of England had left its interest rate unchanged at 3.75 percent, the lowest since June 2023, as there was limited evidence of second-round effects. But the bank cautioned that further increase in energy prices raised the prospect of a hike in November.