UK house prices edged higher in August but annual growth remained subdued as economic uncertainty and higher market interest rates continued to weigh on activity, according to Nationwide.
Prices increased by 0.2% month-on-month after seasonal adjustment, reversing a 0.1% fall in July.
Annual house price growth stood at 1.6%, marginally higher than the 1.4% recorded the previous month.
The average UK property price was £275,465 on a non-seasonally adjusted basis, down from £276,581 in July.
AFFORDABILITY IMPROVING
Robert Gardner, Chief Economist at Nationwide, says the uncertain economic backdrop and geopolitical tensions have contributed to subdued market conditions, with the conflict in the Middle East putting upward pressure on energy prices and market interest rates.
However, he says there are encouraging signs that higher energy costs are not feeding through into underlying inflationary pressures, while weaker private-sector wage growth could give the Bank of England more time to assess the need for further monetary tightening.
Gardner says: “Underlying affordability is improving, as house price growth remains well below earnings growth, although some of these gains have been offset by higher mortgage rates.
“Nevertheless, this suggests that 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.”
NATIONAL PARK PREMIUM
Nationwide’s latest index also highlights the significant premium attached to homes in some of Britain’s most protected landscapes.
Its analysis finds that a property within a National Park commands an average 24% premium compared with an otherwise similar home elsewhere.
That equates to approximately £66,500 based on the average UK house price of £278,784 in the second quarter of 2026.
Properties within 5km of a National Park attract a smaller 6% premium, while homes within National Landscapes in England and Wales – formerly known as Areas of Outstanding Natural Beauty – command an average 14% premium.
Gardner adds: “National Parks are highly desirable areas to live in thanks to the beautiful countryside.
“Development is also controlled with limited new housing construction, which may also help to explain why house prices tend to be relatively high.”
INDUSTRY REACTION
Nathan Emerson, CEO at Propertymark, says: “Considering factors such as ongoing global unrest, it is positive to see the housing market deliver stability and overall consistency.
“The wider economy continues to be finely balanced, with many factors continuing to prove an unwelcome undercurrent for consumer affordability. Across the year to date, there have been many challenges to navigate, with average energy prices climbing, inflation still higher than targeted and the base rate remaining higher than many might prefer.
“A key moment for many households will come with the next base rate decision due mid-month, closely followed by what might be included in the forthcoming Autumn Budget at the end of October.”
INCREASED CHOICE
Nicky Stevenson, Managing Director of Fine & Country, says: “The latest Nationwide figures reinforce the picture of a housing market that is moving forward, but at a measured pace. A 1.6% annual increase in house prices is neither boom nor bust, but reflects a market maintaining a solid baseline of activity while buyers remain highly selective.
“One of the biggest factors shaping the market is the increased choice available to buyers. The overall stock of homes for sale is around 5% higher than a year ago, giving purchasers more options and helping to keep house price inflation in check. At the same time, homes are taking longer to find a buyer, underlining just how important realistic pricing and strong presentation have become.
“There is activity in the market and transaction levels show that people are still moving, but buyers are taking longer to make decisions and are less willing to compromise. Properties that are correctly priced and stand out from the competition are attracting attention, while those that come to market with unrealistic expectations can struggle.
“As we head into the autumn, we expect activity to improve from the summer slowdown, although uncertainty around inflation, mortgage rates and the wider policy environment will continue to limit stronger price growth. For both buyers and sellers, the key message is that national house price figures only tell part of the story. Local market conditions can vary significantly, and understanding supply, demand and pricing in your particular area will be more important than ever this autumn.”
SUBDUED MARKET
Jason Tebb, President of OnTheMarket, says: “Broadly stable property values indicate a subdued market as focused buyers prepared to make their move during the usually quieter summer period proved to be price-sensitive in their negotiations.
“However, market resilience continues to be evident even while higher mortgage costs and economic uncertainty bring an element of caution.
“The market has steadied, helped by a calm hand at the tiller from the Bank of England with consecutive interest rate holds allaying fears and helping with affordability.
“Should mortgage rates remain stable and economic uncertainty eases, this could filter through to renewed activity and sales in the autumn. Inactivity isn’t an option for many, even if a new Prime Minister and another Budget brings an inevitable degree of doubt.”
MODEST VOTE OF CONFIDENCE
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “Although prices are still fairly flat – up a bit, down a bit – that’s probably a good result as far as assessing current market health is concerned.
“Even more so as this data from the country’s largest building society is linked to customer mortgage approvals meaning these figures represent an albeit modest vote of confidence in the future.
“Continuing price sensitivity prompted particularly by mortgage rate and affordability concerns as well as the likelihood of property tax rises in the Budget have been playing on buyers’ minds.
“In our offices, we’re finding the sellers concentrating on the difference between what they’re receiving and what they’re having to pay rather than asking price – bearing in mind four out of five are buyers – are more likely to move, though less quickly as there’s so much choice – and often only after serious negotiations.”
RESILIENT MARKET
Iain McKenzie, CEO of The Guild of Property Professionals, says: “Annual house price growth holding broadly steady at 1.6% in August, alongside a 0.2% monthly increase, suggests the housing market continues to demonstrate a reassuring degree of resilience despite a more subdued summer than usual.
“Many buyers have understandably been sitting on the sidelines over recent months, with higher mortgage costs, economic uncertainty and anticipated policy changes encouraging people to take their time.
“However, there are early signs that this caution could begin to ease as we move into autumn. The number of people searching for homes is rising, with Zoopla reporting a 7% year-on-year increase in buyer searches and growth across every region for the first time in a year.
“Search activity does not translate immediately into sales, but it is an important early indicator that more buyers are beginning to consider their options. With house price growth continuing to lag earnings growth, underlying affordability is gradually improving, even if higher mortgage rates have offset some of those gains.
“We would expect activity to build through the autumn, provided mortgage rates remain broadly stable and there is greater clarity around the policy outlook.
“The market is unlikely to see rapid price growth, but steady growth remains the most likely outcome. There are still plenty of people who need or want to move, and when the right property comes to market at the right price, buyers are willing to act.”
BUDGET HOPES
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “On the ground, we are seeing prices remain flat with sensible offers being accepted. There are more sellers than buyers, but sellers aren’t panicking – asking prices are coming down, but a lot of that is due to initial overpricing meeting the time it takes to find the market level.
“We are seeing a bit of competition over certain new instructions, but when it comes to smaller flats there remains more supply than demand. However, over the summer we have agreed more flat sales, and it feels as though there is some life in this market.
“Hopefully, the market will continue to gather momentum as we move into autumn and doesn’t prematurely slowdown in advance of the Budget, as was the case last year. As for the Budget, it should focus on the property market’s recovery, so that people feel confident enough to move.”
