UK house prices drop 0.6% in May as Middle East conflict weighs

UK house prices fell in May for the first monthly decline this year, according to data from Nationwide Building Society, as economic uncertainty linked to conflict in the Middle East dampened buyer confidence and pushed borrowing costs higher. The lender reported that average property values dropped by 0.6 percent between April and May, marking the sharpest monthly fall in nearly a year and exceeding economists' expectations. On an annual basis, price growth slowed to 1.7 percent in May from 3.0 percent in April. The average UK home now costs £278,024.

Nationwide's chief economist, Robert Gardner, attributed the slowdown to geopolitical tensions. He stated that 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 noted that consumer confidence has weakened noticeably since the start of the conflict, with a key confidence index hitting its lowest level since late 2023 in April.

The housing market's softening coincides with rising mortgage rates. Average rates for two-year fixed mortgages have climbed significantly since February, with current figures...