UK house price growth halved in September as slump continues: Nationwide HPI

House prices are on a downwards trend, but will the market regain momentum?

September was another muted month for the UK housing market, as wider economic uncertainty due to the conflict in the Middle East continued to take a toll. As a result, UK annual house price growth halved from 1.6% in August to 0.8% in September, latest data from Nationwide BS revealed. This means that the average price of a UK property (not seasonally adjusted) dropped to £274,251 in September, down from £275,465 in August 2026.

“Annual growth is now at its weakest rate since December 2025 (0.6%), highlighting how subdued the housing market has become,” commented Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

Escalating tensions between the US and Iran have pushed up energy prices and fed concerns about rising inflation, in turn driving up swap rates – which help to determine mortgage pricing.

UK Housing Market Trends: Graph showing annual percentage change in UK house prices over the past 25 years.

Borrowers could face a £160 increase in their monthly payments

With rising mortgage rates, many prospective buyers will be feeling the squeeze.

Springall explained that the challenges posed by the housing market could lead some prospective buyers to continue renting for the time being instead.

“A borrower taking out a £250,000 mortgage over 25 years would face repayments of around £1,600 a month based on the Moneyfacts average two-year fixed rate of 5.93%,” Springall highlighted.

“That is around £160 per month, or £1,920 more over a year, in repayments compared to the average rate of 4.85% at the start of February 2026, showing how significant an impact the rise in mortgage rates has had on borrowing costs,” she continued.

“The rise in the cost of living and buyer confidence weigh on demand, so it’s important to stress that there is much more at play overshadowing the housing market than just the rise and fall in borrowing costs,” Springall remarked.

While she points out that those who can afford to secure a mortgage now will have “bargaining power on their side”, she cautioned that it would be wise to seek advice when assessing your mortgage options.

Will the mortgage market “regain momentum”?

Nationwide’s Chief Economist, Robert Gardner, commented that “underlying affordability is improving, as house price growth has been well below earnings growth for some time”, explaining that this has only been “partially offset” by the higher mortgage rates.

He’s hopeful that this suggests activity “should regain momentum” if the “energy shock fades”. This would allow buyer confidence to return to the market, which could especially be the case if rates fall back to their pre-conflict levels. However, changes in the market are heavily reliant on the wider geopolitical scene, as we have seen previously.

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