British house price growth slows to 0.8% as monthly prices fall

London, United Kingdom. British house prices rose at their weakest annual pace since December 2025 in September and unexpectedly fell 0.2 per cent month on month, according to Nationwide Building Society. The figures indicated that higher borrowing costs caused by the war in Iran had weighed on demand.

Price growth falls below forecasts

Nationwide said this week that prices increased by 0.8 per cent compared with September last year, half August’s annual growth rate of 1.6 per cent.

The annual increase was below the 1.3 per cent forecast in a Reuters poll of economists. The monthly decline of 0.2 per cent was the joint-fastest since May, compared with a forecast of no change.

Mortgage rates under pressure

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

“Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices, fanning inflation concerns.”

Gardner said there were signs that higher energy prices were not feeding through to underlying price pressures. However, investor expectations that the Bank of England would raise borrowing costs had maintained upward pressure on mortgage rates.

Financial markets expect the Bank of England to raise its benchmark Bank Rate by a quarter of a percentage point in November, with another increase priced in for February.

Loan programme for first-time buyers

Prime Minister Andy Burnham has announced a new loan programme to help first-time buyers purchase a home.

The government said the programme would be open to homebuyers with a 2.5 per cent deposit and provide loans of up to 20 per cent of a property’s value. Further details are due to be confirmed in finance minister John Healey’s budget later this month.