Nikka Sulton

UK house prices slipped by 0.2% in September, according to Nationwide, reversing the 0.3% increase recorded in August.

The average property price fell from £275,465 to £274,251. Annual house price growth also slowed from 1.6% to 0.8%, marking the weakest annual increase since December 2025.

The latest figures suggest the housing market remains subdued as buyers continue to face higher borrowing costs and uncertainty around the wider economy.

Affordability Remains A Challenge

Nationwide chief economist Robert Gardner said housing activity and prices had remained relatively weak in recent months, partly because of the uncertain economic environment.

He also pointed to ongoing geopolitical tensions and their impact on energy prices, which could add to inflation concerns.

However, there has been some improvement in underlying affordability. House prices have been rising more slowly than earnings for some time, helping to improve the position of potential buyers.

Higher mortgage rates have offset some of this progress, however, leaving borrowing costs as an ongoing pressure for households.

Regional Prices Show Mixed Results

The performance of the housing market varied considerably across different parts of the UK.

East Anglia recorded the largest annual decline, with prices falling 0.7% in the three months to September.

The East Midlands followed with a 0.5% annual fall, while prices declined by 0.3% in the South West and 0.2% in the Outer Metropolitan region.

Across Southern England, house prices were 0.1% lower than a year earlier. London was the only southern region to record annual growth.

The North West continued to lead England, with annual price growth of 3.9%, unchanged from the previous quarter.

Northern Ireland remained the strongest-performing part of the UK, although annual growth slowed considerably from 8.6% to 5.9%.

Flats Continue To Lag Behind

House price growth slowed across all property types during the third quarter.

Terraced homes recorded the strongest annual increase at 1.8%, while the average price of a flat was broadly unchanged compared with a year earlier.

There is also a significant longer-term difference between property types.

Since the beginning of 2020, the value of a typical flat has increased by around 14%, compared with a 31% rise for semi-detached homes.

Gardner said London’s weaker housing market was one factor behind the difference, as flats make up a larger proportion of the capital’s housing stock.

Experts Warn Of Continued Pressure

Tom Bill, head of UK residential research at Knight Frank, said rising mortgage costs were weighing on demand and expected this pressure to continue during the final quarter of the year.

He pointed to mortgage approvals being 14% below the five-year average in August, suggesting transaction levels could also come under further pressure.

Bill said the outlook beyond 2026 would depend partly on developments in the Middle East and any property-related measures announced in the Budget.

North London estate agent and former RICS residential chairman Jeremy Leaf also highlighted the impact of borrowing costs and inflation.

He said buyers currently have plenty of properties to choose from, with potentially more stock becoming available, which is contributing to weaker confidence.

Leaf added that buyers are negotiating more aggressively, particularly when purchasing flats, as they try to protect themselves against further financial uncertainty.

Nathan Emerson, CEO of Propertymark, said continued economic uncertainty was increasingly being reflected in the housing market.

With the Autumn Budget approaching, he said attention would be focused on whether the Government introduces measures that could provide greater certainty for people planning to buy or sell a property.

Housing Market Remains Cautious

Nationwide’s latest figures point to a market where house prices are struggling to gain momentum.

Although improving earnings relative to house prices are helping affordability, higher mortgage rates and wider economic uncertainty continue to affect buyer confidence.

Regional differences remain significant, with some areas still recording solid annual growth while others are seeing prices fall.

The upcoming Budget and changes in borrowing costs could therefore play an important role in determining how the housing market performs over the remainder of the year.