Key facts
- UK house price growth slowed to 0.8% annually in September, the slowest since December.
- The average UK home price is £274,251.
- East Anglia saw an annual decline of 0.7% in house prices.
- Northern Ireland experienced the strongest house price growth at 5.9% annually.
- Affordability is improving as house price growth has been below earnings growth.
- Higher mortgage rates have been partially offset by earnings growth.
UK house price growth slowed significantly in September, with annual increases halving to 0.8% as higher mortgage rates and economic uncertainty deterred buyers. The average price of a British home rose to £274,251, a marked slowdown from the 1.6% growth recorded in August and the slowest pace since December.
Nationwide's chief economist, Robert Gardner, attributed the slowdown to geopolitical tensions in the Middle East, which have driven up energy prices and inflation fears. This has led to expectations of further Bank of England rate increases, maintaining upward pressure on mortgage rates.
Data from Moneyfacts showed that the average interest rate on a two-year fixed mortgage had reached its highest level since July 2024, while the average rate on a five-year fixed mortgage hit its highest since October 2023, with both exceeding 5.9%.
Regionally, East Anglia experienced the largest annual decline in house prices at 0.7%, while Northern Ireland stood out with the strongest annual growth of 5.9%. Gardner noted that underlying affordability is improving because house price growth has lagged earnings growth for some time, with higher mortgage rates only partially offsetting these gains. He suggested that market activity could pick up if energy shocks subside and market interest rates fall.