Annual house price growth in the UK halved in September, signalling the weakest rate of growth since December 2025, according to Nationwide’s latest House Price Index.
The annual growth rate stands at 0.8%, down from 1.6% the previous month. The average house price also fell 0.2% from the previous month, following a rise of 0.2% recorded in August, after taking account of seasonal effects. According to Nationwide, the average house price in the UK now stands at £274,251, down from £275,465.
Robert Gardner, Nationwide’s Chief Economist, said: “Market activity and house prices have remained subdued in recent months, in part reflecting the uncertain economic backdrop. 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.”
“Nevertheless, there have been encouraging signs that higher energy prices are not feeding through to underlying price pressures. In particular, private sector wage growth has remained modest, which should give policymakers breathing space to assess the extent to which tighter policy is necessary to ensure inflation returns sustainably to target.”
“Underlying affordability is improving, as house price growth has been well below earnings growth for some time. These gains have been 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.”
On a regional level, most regions saw a slowing in annual house price growth in Q3. Eight of the thirteen regions saw annual growth below 1%, while four saw a small annual decline. Northern Ireland remained the strongest performing region by some way, with annual price growth standing at 5.9%, although this slowed from 8.6% in Q2. The North West, North of England and Scotland were the other strongest performing regions, signifying a clear North-South divide.
Meanwhile, average prices in Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) were down 0.1% year on year. London was the only southern region to record an annual price rise, a modest 0.4%. Meanwhile, the surrounding Outer Metropolitan region saw a 0.2% annual fall. East Anglia was the weakest performing UK region, with prices down 0.7% year-on-year.
Nationwide reported that all property types saw a slowing in annual house price growth in Q3. Terraced properties were the strongest performing with a 1.8% rise, whilst flats remained weakest with prices essentially unchanged compared to a year ago.
Robert Gardner continued: “Looking over the longer term, flats have seen noticeably weaker growth than other property types. For example, since the start of 2020, the price of a typical flat has increased by 14%, less than half the rise in the price of semi-detached, which saw a 31% rise over the same period. This is partly a reflection of regional trends where London, which has a much greater proportion of flats, has underperformed the wider UK.”
Jason Tebb, president of OnTheMarket, commented: “The dip in annual house price growth suggests price sensitivity as focused, needs-based buyers and sellers returned from holiday determined to get on with their moves before the end of the year.”
“The national average figures conceal significant local variations, much depending on the type of property being bought and where it is located in the country – as always, the guidance of a knowledgeable local agent can be extremely helpful to those looking to transact.”
“Market resilience is still in evidence, despite higher mortgage costs sounding a note of caution. The Bank of England’s decision to hold interest rates so far this year has helped in terms of affordability, but there are fears that rising energy bills may finally force its hand this autumn, depending on overall inflation risks.”
“All eyes will be on the budget later this month to see what the new Prime Minister and Chancellor have planned. We already know that there will be assistance for first-time buyers buying new-build homes and hope that on balance the budget provides some much-needed impetus for the housing market, as well as the wider economy.”
Jonathan Hopper, CEO of Garrington Property Finders, commented: “A stagnant summer has been followed by a September slide in prices. Such a sharp slowdown in the annual pace of growth cannot be dismissed as one bad month.”
“Large parts of the UK’s property market are stuck in a rut, with the number of homes for sale exceeding the number of serious buyers.”
“While buyer sentiment is fragile in many areas, prices in the south are being squeezed disproportionately hard. The reason is that high property values in these areas mean that many buyers typically need a large mortgage, and the rise in interest rates over recent months has reduced the amount they can afford to borrow.”
“September traditionally brings a ‘back to school’ bounce in the number of buyers, but things are more muted than usual this year and autumn is set to bring an important test of seller realism. In a market like this, yesterday’s asking price can quickly become tomorrow’s unsold property.”
“For financially secure buyers, that shift in psychology may ultimately prove more important than the headline movement in the index itself. The best buying opportunities are likely to come not from a distressed market, but from a market in which expectations are finally reset.”
