UK house prices fall 0.2% in August as annual figure turns negative

UK house prices dropped by 0.2% in August, after a 0.1% decline in July. The average property price was £298,468, down from £299,153 the previous month. Prices were still 0.2% higher than at the start of the year.

Andrew Asaam, mortgages director at Lloyds, said sellers were holding out against offers they considered too low, while some buyers were waiting to see how conditions develop. "What we're not seeing is a rush of homeowners cutting prices," he said. He added that fewer homes were being sold, with industry figures showing mortgage approvals at their lowest since the start of 2024.

Asaam said average prices were still about 25% above their level at the end of 2019. He expects the market to stay fairly subdued in the coming months, with only a limited effect on prices, because wages are rising and employment has held up.

Northern Ireland led the UK for annual price growth, up 6.9% to a record average of £231,245, although the rate of increase slowed. Scotland saw prices rise 3.5% to £223,437 and Wales 0.6% to £230,282. In England, the North East rose 2.7% to £184,370 and the North West 2.0% to £248,675.

The South East had the biggest annual fall, down 1.6% to £381,729, followed by Greater London, down 1.5% to £534,177. The South West and Eastern England both fell 1.2%, to £298,807 and £331,410 respectively.

Charlotte Harrison, chief executive of Homes at Skipton Building Society, said the Skipton Group Home Affordability Index showed many first-time buyers remained under heavy pressure, with housing costs taking more than 45% of household income for many. She said average first-time buyer deposits in London were equal to 140% of household income, twice the level in the North.

Ian Futcher, financial planner at Quilter, said swap rates had risen sharply in recent days and some lenders had already changed their pricing. He said attention would turn to the Bank of England's decision on 17 September.