UK house prices fell 0.2% in September, with annual growth halving to 0.8%, as higher mortgage rates and economic uncertainty continue to impact the housing market, according to the the latest Nationwide house price index (HPI).

The September HPI revealed that the average property value fell to £274,251, with annual growth slowing from 1.6% in August to its weakest level since December 2025.

Nationwide chief economist Robert Gardner said activity and prices had remained subdued amid an uncertain economic backdrop, with Middle East tensions pushing up energy prices and increasing expectations of higher Bank Rate, which has put upward pressure on mortgage pricing.

“Nevertheless, there have been encouraging signs that higher energy prices are not feeding through to underlying price pressures. Underlying affordability is improving, as house price growth has been well below earnings growth for some time,” Gardner added. “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."

Northern Ireland remained the strongest-performing region, despite annual growth slowing to 5.9% in the third quarter from 8.6% previously. The North West was the strongest region in England, with prices up 3.9%, while East Anglia was the weakest-performing UK region, with prices down 0.7%. Southern England recorded a 0.1% annual decline, while London prices rose 0.4%.

The Nationwide data showed that all property types saw a slowing in annual house price growth in Q3. Terraced homes were the strongest-performing property type, with prices up 1.8% year on year, while flat prices were broadly unchanged. Flats had risen 14% since the start of 2020, less than half the 31% increase recorded for semi-detached properties.

Susannah Streeter, chief investment strategist at the Wealth Club described it as "an unexpected fall at what is usually a brisk time for buying”, especially as it came off the back of a 0.2% rise in August.

Angeline Ong, investment analyst at investing and trading platform IG, similarly commented on the surprise September drop: "It's a double whammy for UK housebuilders. Middle East-driven energy inflation concerns are feeding directly into higher mortgage rate expectations, and that's compounded by serious margin pressure from rising building material costs.

"Names like Persimmon, Taylor Wimpey and Barratt Redrow are likely to stay under pressure heading into the November Bank of England decision, where an interest rate hike is now almost fully priced in. The one thing that could rewrite that narrative is if Healey's budget delivers a first-time buyer loan scheme substantial enough to genuinely offset the slowdown in the UK housing market."

Nathan Emerson, CEO at Propertymark, said affordability pressures and wider economic uncertainty were encouraging consumers to take a more cautious approach, with government measures to support first-time buyers and housing investment likely to be closely watched ahead of the Autumn Budget.

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