The average UK house price experienced an annual fall in August, representing the first year-on-year decrease since November 2023, according to a recent index published by Lloyds.
Property values across the UK recorded an average annual drop of 0.4% during August. This follows a month-on-month decrease of 0.2% in the typical house price, building on a 0.1% month-on-month decline observed in July.
The average house price across the UK in August stood at £298,468.
Andrew Asaam, mortgages director at Lloyds, commented on the figures, stating: “The average property now costs £298,468, marking the first annual fall in house prices since November 2023.”
He noted that despite the recent downturn, prices remain marginally higher than at the start of the year, showing a 0.2% increase since January.
Mr Asaam attributed the challenging market conditions to broader economic factors. “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,” he explained.
He added that current market behaviour does not indicate a widespread panic among homeowners. “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.”
Despite the recent dip and substantial increases in interest rates, Mr Asaam highlighted the longer-term growth in property values. “Average house prices remain around 25% higher than they were at the end of 2019, despite the substantial increase to interest rates seen over recent years.”
Regionally, Northern Ireland continued to demonstrate the strongest annual house price growth, according to Lloyds, with prices rising by 6.9% annually. The average property value in Northern Ireland reached a record high of £231,245.
Scotland also reported solid growth, with prices increasing by 3.5% annually. In Wales, the average house price saw a 0.6% annual increase. Within England, growth remained most robust in the northern regions.
Conversely, price growth in much of southern England continues to face pressure. Lloyds attributed this to the greater affordability challenge in these areas, exacerbated by higher average prices.
For example, in Yorkshire and the Humber, the average house price was £217,085, experiencing an annual decline of 0.3%.
Looking ahead, Mr Asaam anticipates a period of stability rather than significant declines. “We expect the market to remain fairly subdued in the months ahead, but this will likely only have a limited impact on house prices,” he said.
He maintained that underlying factors would continue to support demand. “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.”
Industry experts offered further perspectives on the market dynamics.
Nicky Stevenson, managing director of Fine & Country, advised sellers to be realistic. “In a market where buyers have more choice and are increasingly payment-conscious, an ambitious asking price can quickly become a barrier to securing a deal. Sellers who price realistically from the outset are much more likely to capture the attention of the buyers who are ready to act.”
Jason Tebb, president of OnTheMarket, noted the broader economic context. “As we head into autumn, and another Budget beckons, political uncertainty and challenging economic conditions continue to form a backdrop to activity.”
Ian Futcher, a financial planner at wealth manager Quilter, highlighted the impact of affordability and interest rates. “Clearly, stretched affordability and an uncertain economic background has had a negative impact on house prices and, unfortunately, recent volatility in bond markets has the potential to put further pressure on mortgage rates.”
Mr Futcher also warned about the rapid changes affecting prospective buyers. “Swap rates have risen sharply in recent days and some lenders have already begun adjusting pricing in response. For first-time buyers who have spent months building a deposit and carefully calculating what they can afford, sudden shifts in mortgage rates can pull the rug from under their feet just as they are preparing to make a move.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, offered reassurance to those entering the market. “Lenders are working hard to offer solutions to those trying to get on the ladder for the first time,” he said.
