UK house prices fell in September as annual growth halved
Nationwide said UK house prices fell 0.2% in September and annual growth slowed to 0.8%, the weakest pace since December 2025, in figures released Thursday, October 1, 2026.
Key takeaways
UK house prices fell in September when economists had expected no change on the month.
Nationwide Building Society said prices were down 0.2% on the month, after the usual seasonal adjustment, following a 0.2% rise in August. Annual growth slowed to 0.8%, from 1.6%. Robert Gardner, Nationwide's chief economist, called that the weakest yearly pace since December 2025. Economists had expected a 1.3% rise on the year.
Gardner said activity and prices have stayed subdued, in part because the economic backdrop is uncertain, including expectations of a higher Bank Rate, the Bank of England's benchmark interest rate.
"Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices, fanning inflation concerns. 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."
The rate on newly drawn mortgages rose to 4.60% in August, from 4.45% in July, the Bank of England said. Mortgage approvals for house purchases fell to 54,900, below an average of around 60,100 over the previous six months.
The Bank's Monetary Policy Committee voted 6-3 in September to hold Bank Rate at 3.75%. Three members voted for a rise to 4%.
Consumer prices were up 3.1% in August, above the 2% target. Even so, for most members, the minutes said, short-term market rates had risen since the conflict began and were still feeding through to the rates households and firms pay. They judged that this restraint was already broadly sufficient, and that it reflected the uncertainty around the inflation outlook.
Gardner said underlying affordability is still improving, because house price growth has been well below earnings growth for some time. Higher mortgage rates have only partly offset those gains.
Financial markets expect the Bank of England to raise Bank Rate by 0.25 percentage points in November, and another rise is priced for next February. The decision is due on Thursday, November 5.
Modest private-sector wage growth should give policymakers breathing space to judge how much tighter policy is needed to get inflation back to target, Gardner said.
Activity should regain momentum if the energy shock fades and confidence returns, he said, especially if market rates fall back to where they were before the conflict.
Frequently asked questions
How much did UK house prices fall in September?
Nationwide said prices fell 0.2% on the month, after the usual seasonal adjustment, following a 0.2% rise in August.
How weak is annual house-price growth?
Annual growth slowed to 0.8% from 1.6%, which Nationwide's chief economist called the weakest yearly pace since December 2025.
Why have prices stayed subdued?
Gardner said activity and prices have stayed subdued in part because the economic backdrop is uncertain, including expectations of a higher Bank Rate.
Is the Bank of England expected to raise rates?
Financial markets expect the Bank of England to raise Bank Rate by 0.25 percentage points in November, and another rise is priced for next February.
