Persistent mortgage costs continue to squeeze homebuying demand, and UK house price growth has stalled.

Nationwide Building Society, one of the UK's largest mortgage lenders, said UK house prices failed to grow in October as potential homebuyers were squeezed by soaring mortgage costs. The average UK house price was broadly flat in October at 273,566 ($366,540), Nationwide said on Friday, after a 0.3% decline in September. Economists had expected a 0.2% fall in October. The UK property market began showing signs of strain after the Middle East war shattered expectations of interest rate cuts and pushed up borrowing costs. Major mortgage rates have recently risen to 6%, compared with 4.8% before the conflict erupted, causing prospective buyers to delay their property searches. Nationwide said house prices were only 0.5% higher than a year earlier in October, the slowest annual growth rate since January 2024. UK house prices are facing downward pressure Robert Gardner, Nationwide's chief economist, said: "Recent months have seen a slowdown in both housing market activity and house price growth, partly reflecting uncertainty in the economic environment." He added that inflation concerns triggered by the energy shock had led to "growing expectations in financial markets of Bank of England rate hikes, keeping upward pressure on the market interest rates that underpin mortgage pricing." The report further confirms that potential homebuyers are under pressure. According to Bank of England data, demand for home loans has fallen to its lowest level since December 2023. Official data from the Office for National Statistics showed that house prices fell for a third consecutive month in August. In the short term, homebuying demand is expected to remain subdued. Property surveyors said concerns about rising borrowing costs are prompting buyers to temporarily withdraw from the market. Bank of England officials are expected to raise interest rates at their meeting next week to counter inflation pressures triggered by the Middle East conflict. Meanwhile, rising energy and fuel prices are putting increasing pressure on households, with consumer confidence falling sharply in October. UK mortgage rates rise to 6%, homebuyers under pressure Tom Bill, head of UK residential research at Knight Frank, said: "The impact of the Middle East conflict on the UK property market is becoming more evident over time." He noted: "The effect of higher mortgage costs outweighs any support measures announced by the Chancellor in this week's Budget. However, the absence of major shock measures from the Chancellor may bring some degree of market rebound in the coming months."