UK house prices reached a new peak in August, though growth continues to moderate, according to the Halifax House Price Index.
Data released on Friday shows average property values rose 0.3% last month, adding £932 and taking the national average to £299,331.
Annual growth eased to 2.2%, down from 2.5% in July.
Since January, the average price has increased by less than £600, highlighting a housing market that remains stable despite persistent economic pressures.
AFFORDABILITY CHALLENGE
Amanda Bryden, head of mortgages at Halifax, says: “Affordability remains a challenge, but there are signs of improvement. Interest rates have been on a gradual downward path for nearly two years, and many of the most competitive fixed-rate mortgage deals now offer rates below 4%.”
She adds that sustained wage growth, outpacing house price inflation for nearly three years, has given buyers more confidence to enter the market. First-time buyers have seen modest relief, with the average price of a starter home falling 0.6% since May to £237,577.
On a 95% loan-to-value mortgage over 30 years, monthly repayments would be around £1,179, compared with an average private rent of £1,343.
REGIONAL TRENDS
Regional trends showed a continued North–South divide. Northern Ireland posted the strongest annual growth at 8.1%, followed by Scotland at 4.9%, while Wales saw more subdued rises of 1.6%. In England, the North East, North West, and Yorkshire & Humber all recorded growth above 4%, but the South West posted a 0.8% annual decline. London remained the most expensive market, with prices rising 0.8% to £541,615.
Nathan Emerson, chief executive of Propertymark, says: “With the number of listings, sales agreed, and stock levels higher than this time last year, and with some banks offering specific help to first-time buyers to take their first step onto the housing ladder, this is a sign that the housing market is holding firm.
“However, the latest announcements from the UK Government about reforming Stamp Duty and charging landlords with National Insurance contributions ahead of the next Budget will continue to add further uncertainty for many potential buyers and sellers.”
Halifax expects prices to continue edging higher through the remainder of 2025, supported by improving affordability and steady demand, although at a slower pace than in previous housing cycles.
STABLE MARKET
Iain McKenzie, CEO of The Guild of Property Professionals, says: “The latest Halifax data reinforces what we’ve seen throughout 2025, a housing market that has remained remarkably steady in the face of wider economic pressures.
“August marked the third consecutive month of price growth, nudging average values to a new high of just under £300,000.
“But the real story is stability: since January, prices have risen by less than £600, underlining the balanced conditions we’re operating in.
“Easing borrowing costs have played a central role in supporting buyer confidence. With interest rates now at their lowest level in more than two years, demand has held firm, and we’ve seen healthy levels of activity even through the quieter summer months. Encouragingly, mortgage approvals and transaction volumes are both running ahead of last year.”
HEADWINDS COMING
But he adds: “That said, there are important headwinds to be mindful of. Inflation remains stubbornly above target, tempering expectations of further rapid rate cuts.
“At the same time, speculation over housing tax reform in the Autumn Budget is adding a new layer of uncertainty, particularly for buyers and sellers at the higher end of the market. While proposals remain at the discussion stage, we know from experience that the prospect of change alone can affect decision-making.
“For sellers, it is more important than ever to price realistically. Buyers have the upper hand in today’s high-supply market, and properties priced correctly from the outset are moving far quicker than those that need reductions.
“As we head into the autumn, traditionally a busier period for transactions, setting the right strategy will be key to securing a successful sale.”
