August drop doubles the norm
The latest data released by Rightmove has revealed that average newly listed asking prices fell by 2.0% in August to £364,999, a drop of £7,360, representing the largest August decline since 2018 and significantly exceeding the ten-year monthly average of -1.3%.
Rightmove attributes the sharper fall to a combination of the traditionally quiet summer period and a 12-year high in the volume of homes available for sale, which has pressed sellers arriving at this time of year to price competitively from the outset. Annual asking prices are now 1.0% lower than twelve months ago, the steepest year-on-year fall since December 2023.
"This month's larger-than-usual August price drop is a sign that many sellers are recognising the reality of the market and pricing much more competitively from day one," said Colleen Babcock, property expert at Rightmove.
"Buyers have the widest choice of homes for sale at this time of year in more than a decade, so standing out on price for the right reasons is hugely important.
"While no seller likes to come to market lower than they might have hoped, Rightmove analysis shows that those who price realistically are statistically proven to be giving themselves the strongest chance of finding a buyer and successfully completing a move.
"One tactic some sellers are using when considering lower offers on their home is to also make a lower offer themselves on their onward purchase, to see if they can make up the difference."
Regional picture splits further
National averages, however, are masking a deepening divide in regional price performance. In northern England, newly listed asking prices rose 1.5% in the year to August, led by the North West which recorded the strongest growth of any region at 1.9%. Scotland also posted annual gains. Southern England moved in the opposite direction, with prices down 1.8% year-on-year. The divergence is sharpest in London, where prices have fallen 3.1% over the past twelve months, the largest annual drop of any part of Great Britain.
London under pressure
The capital faces a set of compounding pressures beyond the headline supply imbalance. The number of homes available for sale in London is now at its highest since 2010, intensifying competition among sellers. On affordability, an average London home costs around 17 times the national average annual wage, a ratio that sits alongside elevated mortgage rates to stretch buyers significantly.
London is also priced 38% above the South East, the next most expensive region. Additional cost pressures include higher stamp duty liabilities, the reduced stamp duty thresholds introduced last year, and a Lifetime ISA price cap of £450,000 that disproportionately limits first-time buyers in the capital. A higher concentration of leasehold flats, where buyers are scrutinising service charges and lease terms more carefully than in previous years, adds to longer average selling times and further weight on prices.
Burnham bounce lifts sentiment
Buyer demand nationally has edged higher since the change of government. Rightmove recorded a 5% increase in buying activity following Andy Burnham's appointment as Prime Minister on 20 July, compared with a 2% fall over the same period last summer. Demand remains around 10% below last year's level overall, but the improvement, alongside Burnham's pre-Budget confirmation that property taxes will not be raised in October, has reduced one source of uncertainty for prospective buyers. Rightmove points to several World Cup fixtures and a run of heatwaves as additional factors that weighed on activity through the summer months.
Mortgage rates continued to creep up. Rightmove's daily tracker shows the average two-year fixed rate at 5.09% in August, up from 4.92% the previous month, though the portal notes some scope for rates to ease in the weeks ahead. The changing rate landscape, combined with geopolitical uncertainty and the new Chancellor's autumn Budget, prompted Rightmove to revise its full-year 2026 price forecast downward, from an expected rise of 2% to a projected change of between 0% and -2%.
"National average prices are increasingly masking very different local market conditions," Babcock added. "While asking prices across both northern England and Scotland continue to edge upwards, southern England is moving in the opposite direction, with London seeing the biggest annual price fall.
"Alongside an abundance of choice, the capital faces greater affordability challenges for buyers, through both high price-to-income ratios and higher taxation. The mini Burnham bounce and some renewed general optimism have brought a degree of improvement to the market as a whole in recent weeks. Whether that develops into a more sustained recovery will likely depend on confidence, mortgage rates and the new Chancellor's first Budget this Autumn."
Industry reaction
Marc von Grundherr, director at Benham and Reeves, echoed the view that London's difficulties are centred on affordability rather than structural weakness. "There's no denying that London is having a more challenging year than many other parts of the country and affordability is at the heart of it.
"Higher property values mean London buyers feel every pressure point more acutely, whether that's mortgage costs, stamp duty or the fact that many first-time buyers simply find themselves beyond the useful reach of schemes such as the Lifetime ISA.
"However, I wouldn't characterise the London market as being in any sort of serious decline," he said. "What we're seeing is a much more price-sensitive market and sellers who acknowledge that are still finding buyers.
"The difficulty arises where asking-price expectations remain anchored to a market that no longer exists, and that is particularly evident within parts of the flat market where buyers are also scrutinising service charges, lease terms and the wider cost of ownership far more closely than they perhaps did previously."
Tom Bill, head of UK residential research at Knight Frank, comments, “Rising mortgage rates and uncertainty around tax rises in the Budget are curbing demand, which is being felt more acutely in parts of the country where affordability is already stretched.
"The unpredictable events in the Middle East mean there is nothing to suggest mortgage rates will drop materially in the short term, which should continue to keep a lid on prices this year.
"Meanwhile, the government is likely to fund its spending commitments by increasing taxes on wealth and assets, which means the new high-value council tax bands introduced in November’s Budget increasingly look like introductory rates. As a result of these pressures, we recently revised down our 2026 forecast for UK house price growth to 1.5%.”
Ian Harris, NAEA Propertymark President, said, “Taking a wide-angle view of the property market across the year to date, it comes as little surprise that there has been a dip in overall house prices. We have seen global unrest influence household spending, the warm weather potentially impacting viewings, as well as raised concerns around longer-term affordability in areas such as energy prices.
“Although we have seen the base rate hold steady and inflation dip, it has not been enough to ignite wider consumer confidence. With reduced mortgage approvals, decreased mortgage lending and an Autumn Budget on the horizon, it may be a case of a slightly more subdued quarter ahead.”
