House Prices Dip in August as Mortgage Worries Return

UK house prices took an unexpected dip in August, with the average value slipping 0.1 per cent to £271079, according to the latest data from Nationwide. This decrease marks the fourth monthly fall in the past six months and runs contrary to predictions of a slight 0.2 per cent rise. Over the summer, the average price dropped by 0.4 per cent, offsetting July’s modest 0.5 per cent increase.

On an annual basis, prices remain 2.1 per cent higher than a year ago, though the annual rate of house price growth has slowed from 2.4 per cent in July and over 4 per cent at the beginning of the year. Economists attribute this subdued performance to persistent affordability challenges and concerns about the jobs market. Typical homebuyers with a 20 per cent deposit now spend around 35 per cent of their take-home pay on mortgage repayments, compared with the long-run average of 30 per cent.

Regional variations are still evident, as Zoopla data shows a stronger upward trend in northern property values compared with London and the South East. The stamp duty changes in April prompted a rush to complete purchases earlier in the year, leaving the market with a ‘hangover’ and slower recovery than many analysts anticipated.

Forecasters at leading property firms including Savills, Rightmove and Zoopla have revised their expectations downward for house price movements through the remainder of 2025. High interest rates and a softening jobs market have weighed heavily on consumer confidence and demand. Despite these headwinds, mortgage approvals data indicates continued interest in moving, but buyers are increasingly striking harder bargains, capitalising on the higher number of properties currently available for sale.

The latest survey by the Royal Institution of Chartered Surveyors points to further easing in price inflation in the coming months. There are additional clouds on the horizon, with speculation over potential property tax rises in the autumn budget introducing even greater uncertainty into the market outlook.

Absent a significant shift in policy or taxation, buying demand could receive a boost if wage growth continues to outstrip house price inflation and borrowing costs moderate with possible further Bank of England rate cuts. For now, the market remains cautious in the face of stubborn mortgage rates, an unpredictable jobs market, and the possibility of further changes in government policy.