British house prices failed to rise in monthly terms for the first time since July 2021, mortgage lender Nationwide said on Friday, a latest sign of the slowdown in the market caused by the cost-of-living squeeze and rising interest rates.

House prices were unchanged from August and were 9.5% higher than in September last year, representing the first time the annual measure did not show a double-digit percentage gain since October of last year, Nationwide said.

Economists polled by Reuters had forecast monthly and annual price rises of 0.3% and 10.0% respectively.

Britain’s housing market has cooled after a coronavirus pandemic boom as surging inflation hits consumers budgets and the Bank of England raised interest rates.

Robert Gardner, Nationwide’s chief economist, said the slowdown had been modest so far and a shortage of homes for sale meant price growth remained firm in annual terms.

“However, headwinds are growing stronger suggesting the market will slow further in the months ahead,” Gardner said. “High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows.”

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