UK house prices declined by 0.1% in May 2026, extending a three-month losing streak that began in March when prices fell 0.5% [1, 2]. The average home price in May stood at £298,806, while annual house price growth slowed to 0.5%, below analyst forecasts of 1% [1, 2].
The UK property market faces pressure from uncertainty and inflation expectations tied to the war in Iran, which is impacting buyer affordability and demand, Halifax’s Amanda Bryden said. She noted, "Property price trends continue to reflect the uncertainty linked to developments in the Middle East. Despite recent cuts to mortgage rates, higher inflation expectations have kept borrowing costs above the level seen at the start of the year, continuing to stretch affordability for many buyers and temper demand" [1].
Mortgage costs have risen sharply over recent months, with average two-year fixed mortgage rates reaching 5.66% in early June, up from 4.83% in March 2026 [1]. Despite this, mortgage lending jumped to a 15-month high in April 2026, indicating that borrowing demand remains robust despite higher costs [2]. Financial markets anticipate that the Bank of England will raise interest rates later in 2026 amid ongoing war-related uncertainty [2].
Jason Tebb, president of OnTheMarket, described the current market as "the strongest buyers’ market we have seen in many years, with plenty of stock to choose from." He added that "Little movement in average house prices suggests buyers and sellers are adopting a pragmatic outlook and adjusting expectations rather than a loss of confidence. Steadier prices are better as far as those trying to get on the ladder for the first time are concerned, as there is less risk of being priced out further" [1].
Activity among first-time buyers remains subdued as affordability challenges persist [1]. Overall, the declining prices reflect a pragmatic market response rather than a collapse in confidence.
House prices fell by 0.5% in March and 0.1% in April 2026 before the May drop, with Halifax releasing the latest figures on June 5, 2026 [1, 2]. The market is closely watching how interest rates and geopolitical risks will influence demand in the coming months.
