The UK housing market took a small step back in August, with average house prices slipping by 0.1% compared with July, according to Nationwide. This comes after a modest 0.5% rise
the previous month.
On an annual basis, house price growth also slowed slightly, easing from 2.4% in July to 2.1% in August. The average property now costs £271,079.
Why the slowdown?
Robert Gardner, Nationwide’s chief economist, said the soft growth isn’t surprising. “House prices are still high compared to household incomes, making deposits harder to save for—especially after years of cost-of-living pressures,” he explained.
Mortgage costs remain a big hurdle too. Average repayments for a first-time buyer with a 20% deposit now swallow around 35% of take-home pay, well above the long-term norm of 30%.
Even so, Gardner expects affordability to improve gradually as wages rise faster than house prices and borrowing costs ease if interest rates fall again in the coming months.
What’s happening on the ground?
Sellers are becoming more realistic. Alice Haine of Bestinvest said many sellers who initially overvalued their homes are now cutting prices to attract buyers.
Transactions are stabilising. Nathan Emerson of Propertymark noted fewer deals are falling through, suggesting more sales are being completed.
Mortgage rates remain mixed. Mark Harris of SPF Private Clients said some lenders have nudged rates up while others trimmed them, partly due to fluctuating swap rates and the quieter summer market.
Estate agents’ take
For many in the property industry, August’s tiny dip looks more like a pause than a downturn.
Matt Thompson at Chestertons said buyers used the quieter summer weeks to reassess finances and refine searches.
Jonathan Handford at Fine & Country described the 0.1% drop as “the market catching its breath.”
Tom Bill of Knight Frank warned that ongoing tax speculation could unsettle both buyers and sellers ahead of the next budget.
Looking ahead
Experts generally expect house price growth to remain modest for the rest of 2025. Karen Noye at Quilter pointed out that the market is still “holding reasonably firm,” while Iain McKenzie of the Guild of Property Professionals stressed the importance of realistic pricing as more stock comes onto the market and buyers gain bargaining power.