The annual rate of growth in UK house prices halved to 0.8% in September, from 1.6% in August, according to an index.
The average property value fell by 0.2% month on month in September, following a 0.2% increase in August, Nationwide Building Society said.
Across the UK, the average house price in September was £274,251.
Robert Gardner, Nationwide’s chief economist, said: “September saw UK annual house price growth halve to 0.8%, the weakest rate of growth since December 2025.”
He added: “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 of England base rate) increases, which has maintained upward pressure on the market interest rates which underpin mortgage pricing.”
Mr Gardner said that underlying housing affordability is improving, “as house price growth has been well below earnings growth for some time”.
He said: “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.”
Karen Noye, a mortgage expert at wealth manager Quilter said: “These figures show that many would-be movers are taking a ‘wait-and-see’ approach.
“Many buyers and sellers alike appear to be sitting on their hands as they wait for a clearer economic backdrop and a better understanding of the policy landscape ahead of Chancellor John Healey’s first Budget.
“When purchasing a home is one of the biggest financial decisions a person will ever make, uncertainty over inflation, interest rates and potential policy changes can be enough to delay a move by weeks or even months.”
Sarah Coles, head of personal finance at AJ Bell said: “Prices are now growing at their slowest pace since December last year, and are significantly lagging inflation. It means property is losing value once inflation is taken into account.
“It’s easy to see why. Mortgage rates have been climbing since early August, forcing buyers to rethink their plans.”
Amy Reynolds, head of sales at London-based estate agency Antony Roberts, said: “We’re seeing a sensible, needs-driven market: well-presented homes priced correctly are selling, and those pitched too hopefully are sitting.”
