House prices take bashing from Middle East
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Home > News DIRECT HIT: House prices take bashing from Middle East war By Simon Hacker | 1st June 2026 The value of homes in Gloucestershire and across the UK saw their first fall in 2026 according to House Price Index (HPI) data on May’s performance conducted by the UK’s biggest mortgage lender, Nationwide .
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Property values fell 0.6%, the lender said, as geopolitical tensions in the Middle East and rising borrowing and energy costs impacted buyer demand. Last month’s Nationwide update had identified a slowing in the speed of growth on bricks and mortar values.
But with the average UK price now landing at £278,024, the new data is the first to show that transaction prices have retreated in direct reaction to higher mortgage quotes from lenders. Robert Gardner, Nationwide’s Chief Economist, said: “UK annual house price growth slowed to 1.7% in May, from 3.0% in April.
Prices fell by 0.6% month on month, after taking account of seasonal effects – the first monthly decline so far this year.” He added: “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.” Consumer confidence has weakened noticeably since the start of the conflict, he said, with GfK’s headline index falling to its lowest level since late 2023 in April, and only a marginal increase being evident in the new figures covering May.
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He said: “Measures of housing market sentiment have also deteriorated.
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 remaining deep in negative territory in April.” Agents Knight Frank , who have offices in Cheltenham, Cirencester and Stow-on-the-Wold, said the data was fresh evidence that the market was stuttering at precisely the time when the sector expected momentum to be building.
Tom Bill, the agency’s head of UK residential research, predicted that there would not be a “cliff-edge moment”, but the impact of higher borrowing costs looked set to erode spending power and squeeze house prices this year as mortgage rates agreed before the Middle East conflict gradually disappear.
He said: “With the Bank of England likely to sit on its hands for the foreseeable future, we expect minimal house price growth in 2026, with uncertainty around the Budget and ideological direction of the government likely to keep a lid on activity.” Looking ahead, Nationwide said the good news was that the economy had entered the geopolitical turbulence on a slightly stronger footing than expected.
Report source: Punchline Gloucester