Key facts
- UK house prices are experiencing a slump.
- Rising mortgage rates and geopolitical tensions are impacting the housing market.
- Homes are taking longer to sell due to low demand and high asking prices.
- The average UK house price is estimated to be between £268,000 and £300,000.
- HM Land Registry reported a 0.4% month-on-month fall in average UK house prices in March.
- London house prices have fallen by 2% between March 2025 and March 2026.
UK house prices are facing a downturn, with multiple factors contributing to the slump. Rising mortgage rates, ongoing market volatility, and geopolitical tensions, particularly the conflict involving Iran, have dampened optimism for property price growth. Lenders and experts, initially positive at the start of the year, have seen their outlook diminish.
The Bank of England's decision to hold interest rates is influenced by fears of inflation stemming from the conflict, meaning borrowing costs for housing are unlikely to decrease soon. Mortgage rates from major banks are now significantly higher than at the beginning of the year. Additionally, homes are taking longer to sell, a situation attributed to both low demand and potentially overvalued asking prices.
Various house price indices provide a snapshot of the market. The HM Land Registry's data for March shows the average UK house price at £268,132, marking a 0.4% decrease month-on-month and a minimal rise of less than 0.1% annually. This index, considered authoritative as it includes cash purchases, has a six-week time lag. London's property market continues to decline, with prices falling 2% between March 2025 and March 2026 to an average of £542,065.
More recent data from Nationwide indicates a slowdown in annual house price growth. In May, prices rose by 1.7% annually, down from 3% in April. After seasonal adjustments, Nationwide reported a 0.6% month-on-month decrease. As of the end of May, Nationwide's average UK house price stood at £278,024. Robert Gardner, chief economist at Nationwide, noted that while market interest rates have risen, their impact on affordability has been modest, and the market remains resilient due to strong household finances and low debt levels.