UK house prices dip as Middle East conflict knocks buyer confidence: Nationwide HPI

What does this mean for someone trying to get on the property ladder?

UK house prices fell for the first time this year as far-reaching consequences of conflict in the Middle East continue to stifle buyer demand. This is according to latest figures released today by one of the country’s biggest mortgage lenders, Nationwide BS, that revealed the average price of a property in the UK shrank by 0.6% (around £900) between April and May to £278,024.

"Given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates," Robert Gardner, Chief Economist at Nationwide BS, said “some loss of momentum was to be expected”.

“Consumer confidence has weakened noticeably since the start of the conflict,” Gardner explained, adding that GfK’s Consumer Confidence Index increased only marginally last month after dropping to an over two-year low in April 2026.

Furthermore, Gardner said that “measures of housing market sentiment have also deteriorated”, with the Royal Institution of Chartered Surveyors (RICS) reporting “a sharp fall in new buyer enquiries in March, taking the index to its weakest reading since 2023”. Despite a very slight improvement in April, enquiries remained “deep in negative territory in April”, he continued.

Annual property price growth slows to 1.7%

Nationwide BS’s House Price Index (HPI) also showed the rate at which property prices have risen over the course of a year slowed to 1.7% in May (from 3.0% in April). As a result, a typical UK home is now worth almost £5,000 more than a year ago.

But, while the lull in annual property price growth may dismay existing homeowners, it could offer a sliver of opportunity to those struggling to get a foot on the ladder.

“Affordability remains a key issue for would-be buyers. Not only have house prices risen by almost £14,000 over the past two years alone, but higher mortgage rates, inflationary pressures and a lack of affordable housing create a challenging environment,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk. However, she added that “buyers who can afford a mortgage … will have bargaining power on their side”.

Mortgage lenders make cuts

Those currently searching for a mortgage deal may feel some relief that more than a dozen lenders made cuts last week – including the likes of Barclays Mortgage and NatWest. What’s more, others could soon follow suit.

“Lenders continue to reprice their offers in reaction to volatile swap rates,” said Springall, adding that with two- and five-year swap rates trending at 30-day lows, “this typically creates a more tolerant lean towards making further rates cuts than rises”.

“It will be vital to keep momentum in the mortgage market at a time when fears over the rise in the cost of living continue to weigh overhead. Relaxing loan-to-income rules allows buyers to secure their dream home, such as with Nationwide’s Helping Hand mortgage, and supports first-time buyers who remain the lifeblood of the market,” she concluded.

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