UK house price growth slowed significantly in September.

According to Nationwide data, UK house prices rose just 0.8% year-on-year, down from 1.6% in August, marking the weakest pace since December 2025.

After seasonal adjustment, house prices fell 0.2% month-on-month in September, compared with a 0.2% increase in August.

The average UK house price dropped to 拢274,251, down from 拢275,465 in August.

Nationwide attributes the recent weakening of the housing market primarily to a combination of uncertain economic prospects, rising energy prices, and renewed concerns about interest rate expectations.

Energy Shock Rekindles Rate Worries

Nationwide noted that the Middle East conflict has pushed energy prices higher and raised market fears that UK inflation could remain elevated. This has further reinforced financial market expectations that the Bank of England will need to keep interest rates higher, or even tighten policy further, continuing to put pressure on mortgage costs.

The housing market is highly sensitive to interest rates. Even though house price growth has already slowed markedly, as long as mortgage rates remain elevated, the monthly repayment burden for buyers is unlikely to ease significantly.

Nationwide Chief Economist Robert Gardner said that market activity and house price performance have both been subdued in recent months, with one important reason being the considerable uncertainty still surrounding the economic environment.

Wages Outpace House Prices, but Mortgage Costs Offset the Improvement

From an affordability perspective, the UK housing market has actually seen some improvement. Because house prices are rising more slowly than wages, the pressure on household incomes relative to property prices has eased somewhat. The problem, however, is that higher mortgage rates have offset this improvement. In other words, the price-to-income ratio facing buyers may be improving, but the financing costs that actually determine monthly housing expenses remain elevated.

This is why housing demand has not rebounded noticeably even though house price growth has cooled significantly.

Gardner said that if the energy price shock gradually fades and borrowing costs can return to levels seen before the Middle East conflict, the UK housing market could still regain momentum.

Northern Regions Continue to Outperform the South

Regionally, the divergence in the UK housing market remains pronounced. In the three months to September, house price growth was below 1% year-on-year in 8 out of 13 regions, while 4 regions recorded slight declines.

Northern Ireland remained the strongest performer, with house prices up 5.9% year-on-year, though this was also notably below the 8.6% recorded in the previous quarter.

The North West of England saw house prices rise 3.9%, the strongest performance in England and unchanged from the previous quarter.

Scotland and the North of England both rose 3.3%.

By contrast, England as a whole saw house prices rise just 0.5% year-on-year. The North rose 1.6%, while the South fell 0.1%.

London Becomes the Only Southern Region Still Rising

London house prices rose 0.4% year-on-year, making it the only region in southern England still posting positive growth. Prices in London's outer metropolitan area fell 0.2%, while the East of England was the weakest performer, declining 0.7% year-on-year.

In the three months to September, the average UK house price stood at 拢276,157, up 1.2% year-on-year.

London remains the most expensive region in the UK, with an average house price of 拢529,720, while the North of England is the cheapest at 拢174,731.

Flats Continue to Underperform Other Property Types

There are also clear differences in performance across property types. In the third quarter, year-on-year price growth slowed across all major UK property types, with terraced houses performing best at 1.8%, while flat prices were broadly flat.

Over the longer term, flats have significantly underperformed other property types. Since early 2020, the price of a typical UK flat has risen just 14% in cumulative terms, less than half the 31% gain recorded for semi-detached houses.

Overall, the signal from the UK housing market in September is fairly clear: house prices themselves have cooled markedly, but inflation concerns driven by high energy prices and elevated mortgage rates continue to make a recovery in buyer demand difficult. What ultimately determines whether the housing market can regain momentum is not just whether prices fall further, but whether the energy shock fades and whether UK borrowing costs can genuinely decline.