Published Tue, Sep 1, 2026 · 03:28 PM
[LONDON] UK house prices rose in August according to one of the country’s top mortgage lenders, suggesting that demand is holding up despite the economic effects of ongoing conflict between the US and Iran.
Nationwide Building Society said the average price of a home rose 0.2 per cent to £275,465 (US$373,100) in August, reversing a downwardly revised 0.1 per cent drop the previous month. The latest month’s reading was slightly stronger than the 0.1 per cent increase expected by economists.
The reading implies Britain’s housing market may be weathering the Middle East conflict. Healthy savings buffers and a boost to sentiment from Prime Minister Andy Burnham’s cost-of-living measures are helping sustain demand, although energy costs remain high and prices have fallen in two of the last four months.
“Underlying affordability is improving, as house price growth remains well below earnings growth,” Robert Gardner, Nationwide’s chief economist, said. Higher mortgage rates, however, are offsetting some of those gains, he added.
The Iran energy shock has dashed hopes of interest-rate cuts, with traders now expecting a quarter-point increase by the end of the year. The average five-year fixed-rate mortgage remains around 0.8 percentage points higher than before the war at 5.63 per cent, according to Moneyfacts.
New Chancellor of the Exchequer John Healey will deliver his first budget next month hoping to avoid any harm to the economy from speculation about tax rises – a risk that could further discourage prospective buyers.
Households are also bracing for higher energy costs this winter after energy regulator Ofgem announced a 4 per cent increase in the price cap for gas and electricity bills from October. At the same time, firms are offering lower pay rises and new jobs are in scarce supply.
Official figures, which are based on completed transactions, showed house prices falling for the first time this year in June. Property website Rightmove also said asking prices fell 2 per cent in August, posting their biggest monthly drop since 2022, with particularly weak figures in London.
However, Nationwide’s figures suggest demand remains relatively resilient, and could rebound if tensions in Iran subside. The report showed house prices were up 1.6 per cent year-on-year in August, following a 1.4 per cent increase the previous month. Consumer price inflation is currently running at 2.9 per cent.
“Activity should regain momentum in the quarters ahead providing the energy shock wanes and confidence returns, especially if market interest rates fall back towards pre-conflict levels,” Gardner said. BLOOMBERG
