House prices in the UK fell by 0.4% in the year to August, the first annual decline since November 2023, according to the Lloyds House Price Index (formerly the Halifax House Price Index).
Prices dropped by 0.2% over the month, following a 0.1% fall in the previous month. The average property price stood at £298,468, compared with £299,153 a month earlier.
Despite the recent declines, prices remained 0.2% above their level at the start of the year.
Andrew Asaam, mortgages director at Lloyds, said sellers were reluctant to accept lower offers, while some buyers were waiting for greater clarity over market conditions.
He said: “The housing market has faced a more difficult backdrop in recent months, with the impact of global events on inflation and borrowing costs creating greater economic uncertainty. What we’re not seeing is a rush of homeowners cutting prices.
“But more are choosing to sit tight, with sellers reluctant to accept offers they feel are too low, while some buyers are waiting to see how conditions develop.
“As a result, fewer homes are changing hands, with latest industry figures showing mortgage approvals now at their lowest level since the start of 2024.”
Asaam said average house prices remained around 25% higher than at the end of 2019, with wage growth helping to ease some of the pressure on affordability from higher borrowing costs.
He said: “We expect the market to remain fairly subdued in the months ahead, but this will likely only have a limited impact on house prices. While affordability remains a challenge, wages continue to grow and employment has held up better than many anticipated.
“This will help to support demand from those who need or want to move.”
NORTHERN IRELAND LEADS ANNUAL GROWTH
Northern Ireland recorded the strongest annual growth in the UK at 6.9%. Although the pace eased, its average property price reached a record £231,245.
Prices in Scotland rose by 3.5% over the year to an average of £223,437. Wales recorded growth of 0.6%, taking the typical value to £230,282.
Within England, the North East recorded annual growth of 2.7%, with an average price of £184,370. Prices in the North West rose by 2.0% to £248,675.
The South East recorded the largest annual fall, with prices down 1.6% to £381,729. Greater London followed with a decline of 1.5%, taking the average to £534,177.
The South West and Eastern England both recorded annual falls of 1.2%, with average prices of £298,807 and £331,410 respectively.
BUYERS AND SELLERS AWAIT BUDGET
Nathan Emerson, chief executive of Propertymark, said rising household costs and pressure on affordability had contributed to caution in the market.
He said: “As we head into the autumn months, the upcoming Autumn Budget may well help determine the plans of many aspiring buyers and sellers for their next house move, alongside the upcoming inflation figures and interest rate announcement in the middle of the month.
“Following what has, in part, been an uneven year, it is hoped that the housing market will regain a more stable footing as the year progresses.”
>h5>ADJUSTING EXPECTATIONS
Jason Tebb, president of OnTheMarket, said: “Buyers and sellers are taking a pragmatic approach and adjusting expectations. The resilience of the market, and determination of needs-based buyers and sellers who are proceeding with their transactions, remains evident.
“Ongoing Middle East tensions have created further volatility among Swap rates in the past week, but so far this year, the Bank of England has held interest rates steady, creating a calming effect.
“Affordability concerns remain however, particularly if lenders increase their mortgage pricing in the short term and the Bank raises interest rates at next week’s meeting, but borrowers seem to be adapting to shifting market conditions remarkably well.
“As we head into autumn, and another Budget beckons, political uncertainty and challenging economic conditions continue to form a backdrop to activity.”
BUYER-SELLING STANDOFF
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “We are seeing a bit of a stand-off between buyers who are nervous about making offers while worried about the effects of inflation on mortgage costs and sellers who believe they have reduced as much as they can.
“Therefore, prices overall in the fewer properties which are changing hands are not only softening but sales are taking longer.
“There is more movement when sellers set realistic asking prices from the outset and appreciate after a period of marketing that even a cheeky offer is worth considering.
“Thankfully, activity is picking up now that the main holiday season is over, which is helping to improve confidence a little.”
