NATIONWIDE says house prices were down 0.6% month on month in May as the “impact of the Middle East conflict feeds through” into the property market – though it’s the perfect time for first-time buyers to negotiate a bargain price, experts say.
Its House Price Index showed UK annual house price growth slowed to 1.7% in May, from 3% in April – while house prices were down 0.6% month on month, the first monthly decline so far this year.
Nationwide said that the housing market has lost its momentum due to the conflict in Iran finally feeding through into the figures.
It pointed out that the Royal Institution of Chartered Surveyors reported a sharp fall in new buyer enquiries in March, taking the index to its weakest reading since 2023 and remained deep in negative territory in April.
Though the UK economy entered this shock on a slightly stronger footing than expected.
The economy grew by a healthy 0.6% quarter on quarter in the first three months of the year, while inflation softened more than expected in April to 2.8%.
Consumer confidence has weakened noticeably since the start of the conflict
Robert Gardner, Nationwide’s Chief Economist, said: “Given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates, some loss of momentum was to be expected. Indeed, consumer confidence has weakened noticeably since the start of the conflict, with GfK’s headline index falling to its lowest level since late‑2023 in April, with only a marginal increase in May.
He continued: “Economic growth is likely to be somewhat weaker and inflation higher than previously expected this year as a result of developments in the Middle East, although the impact will ultimately depend on the duration of the shock and the policy response.
“The UK economy and housing market have proved remarkably resilient in recent years. Household finances are solid, with total household debt at its lowest level relative to income for around two decades, and sizeable savings buffers have been built up, though these are not evenly distributed across households.
“Moreover, housing affordability had been improving steadily in recent years due to a combination of income growth outpacing house price growth by a wide margin and a modest decline in borrowing costs.
“While market interest rates have risen in recent months, the impact on affordability has so far been modest. Indeed, swap rates, which underpin fixed‑rate mortgage pricing, remain well below the highs reached in 2023 and are broadly in line with levels prevailing in 2024, implying only a partial reversal of earlier gains.
“This provides some confidence that, if the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short-lived.”
First-time buyers are in a position to negotiate very hard on price
Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, said it’s the perfect opportunity to snap up a bargain price for a home.
He added: “The impact of the Middle East conflict, and specifically the higher mortgage rates it triggered, is now starting to feed through. While first-time buyers will be elated by this news, those already on the property ladder will be feeling anything but.
“Current conditions in the property market are perfect for anyone who wants to snap up a property at a bargain price as buyers hold all the cards.”
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, said many landlords have left the market.
He added: “The war on Iran has impacted a housing market that could have been assisted by lower rates at the beginning of the year. On top of that many accidental landlords have realised that enough is enough and the maths isn’t maths-ing when it comes to their properties and want out.
“Only a significant drop in interest rates or stamp duty concessions can provide the adrenaline shot that is needed.”
Babek Ismayil, CEO at homebuying platform OneDome, said sentiment is weak in the market.
He added: “This latest data from the Nationwide reinforces the buyers’ market we are now in.
“With mortgage rates still noticeably higher than they were at the end of February before the war began, and sentiment as a whole understandably weak, first-time buyers are in a position to negotiate very hard on price.”
The vast majority of home movers will sit on their hands
Chris Barry, Director at London-based Thomas Legal, said the market is slowing.
He added: “2026 started unseasonably strong as interest rates were predicted to decline along with pent up demand carried over from the tail end of 2025.
“The result of this early spike in activity has meant that spring activity, which is typically buoyant, has started to slow earlier.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said there are too many reasons why people are choosing not to move homes at this time.
He added: “The property market is arguably the most accurate barometer of the UK economy, and how confident the public feels generally. When you combine higher taxation, Middle East woes and the inevitable inflationary pressures on the horizon, the vast majority of home movers will sit on their hands.”
Photo by Blake Wheeler on Unsplash.
