UK house price growth halved in September, falling to its weakest level since December 2025 as higher mortgage rates and economic uncertainty continued to weigh on the market.

Nationwide’s latest House Price Index shows annual growth slowed to 0.8%, down from 1.6% in August.

Prices also fell by 0.2% month-on-month, reversing August’s 0.2% increase.

The average UK property price slipped to £274,251, down from £275,465 in August.

The slowdown comes amid continued pressure on mortgage rates, inflation concerns and uncertainty over the wider economic outlook.

Mortgage rates weigh on the market

Robert Gardner, Nationwide’s chief economist, said: “Market activity and house prices have remained subdued in recent months, in part reflecting the uncertain economic backdrop.

“Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices, fanning inflation concerns. This in turn has led to mounting financial market expectations of Bank Rate increases, which has maintained upward pressure on the market interest rates which underpin mortgage pricing.”

However, Gardner pointed to improving underlying affordability, with earnings rising faster than house prices.

He suggested that housing market activity could recover if energy prices stabilise, confidence improves and mortgage rates ease.

North-South divide widens

Nationwide’s regional figures for the third quarter reveal a clear divide between northern and southern housing markets.

Eight of the 13 UK regions recorded annual house price growth below 1%, with four reporting outright falls.

Northern Ireland recorded the strongest annual growth at 5.9%, although this was down from 8.6% in the previous quarter.

The North West was England’s strongest region, with prices rising 3.9% year-on-year.

Scotland and the North of England both recorded growth of 3.3%, while Yorkshire and the Humber saw prices increase by 1.2%.

By contrast, annual growth across England as a whole slowed to just 0.5%.

Southern England recorded a 0.1% annual decline, with London the only southern region to register an increase.

Prices in the capital rose by just 0.4%, down from 1.6% in the previous quarter.

East Anglia was the weakest-performing region, with prices falling 0.7% year-on-year. The East Midlands recorded a 0.5% decline, followed by the South West at 0.3% and Outer Metropolitan at 0.2%.

The figures highlight the continuing divergence between markets in northern England and those in the south, where higher property values and affordability pressures remain significant.

Flats continue to lag behind houses

Nationwide’s latest figures also reveal a widening gap between property types.

Terraced houses recorded the strongest annual growth in the third quarter, with prices rising by 1.8%.

Flats remained the weakest-performing property type, with average prices virtually unchanged from a year earlier.

The longer-term figures underline the difference.

Since the beginning of 2020, the price of a typical flat has increased by 14%. That compares with a 31% rise for semi-detached houses over the same period.

Nationwide attributed part of the difference to regional trends, particularly London’s weaker performance. The capital has a considerably higher proportion of flats than the wider UK.

Outlook remains uncertain

Gardner said there were signs that higher energy costs had yet to feed through significantly into underlying inflation.

Private-sector wage growth has remained relatively modest, potentially giving policymakers more time to assess whether further interest rate increases are necessary.

He added: “Underlying affordability is improving, as house price growth has been well below earnings growth for some time. These gains have been only partially offset by higher mortgage rates.

“This suggests that activity should regain momentum in the quarters ahead providing the energy shock fades and confidence returns – especially if market interest rates fall back to pre-conflict levels.”

Nathan Emerson, chief executive of Propertymark, said economic uncertainty was increasingly affecting consumer confidence.

He commented: “As the economy continues to face periods of uncertainty and fluctuation, it is sadly unsurprising that the effects are increasingly being felt across the housing market. Many consumers are taking a more cautious approach to their household finances, with affordability pressures continuing to influence decisions around buying and selling property.

“With the Autumn Budget now only weeks away, there will be close attention on whether the UK Government introduces measures that can provide greater certainty for those looking to buy or sell.

“Support to help first-time buyers overcome the barriers to homeownership would be particularly welcome as we round the year off, while measures that encourage investment in housing will also be important to ensure the market is equipped to meet future demand.”