UK house prices fell 0.2% in August, according to the latest Lloyds UK house price index, taking the average property value to £298,468 and marking the first annual decline since November 2023. On a year-on-year basis, prices are now down 0.4%, having also dipped 0.1% over the quarter.
"UK house prices fell slightly in August, down -0.2% over the month following a similar decline in July," said Andrew Asaam, mortgages director at Lloyds. "The average property now costs £298,468, marking the first annual fall in house prices since November 2023. Despite that, prices are still marginally up (+0.2%) since the start of the year.
"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.
"It's also important to keep recent price movements in perspective. 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. The market's adjustment to higher borrowing costs has been gradual, with wage growth helping to offset some of the pressure on affordability. The recent modest declines in prices are best viewed in that wider context.
"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."
Regional divide
A clear north-south split continues to define the UK house price index picture. Northern Ireland leads all nations and regions, with prices up 6.9% annually to an all-time high average of £231,245, though that growth rate has moderated compared with recent months. Scotland also continues to outperform, with prices rising 3.5% over the year to £223,437, while Wales recorded more modest annual growth of 0.6%, taking the average to £230,282.
Within England, northern regions are again holding up better than their southern counterparts. The North East recorded annual growth of 2.7%, bringing the average price to £184,370, and the North West saw a 2.0% rise to £248,675.
Southern England is under greater pressure, largely reflecting the affordability strain of higher average prices in those markets. The South East recorded the steepest annual decline of any English region, with prices falling 1.6% to £381,729. Greater London was close behind, down 1.5% to £534,177, while the South West and Eastern England both fell 1.2%, to £298,807 and £331,410 respectively.
Industry reaction
Nathan Emerson, CEO of Propertymark, comments, “Across the year so far, many people have, in some way, felt the direct impacts of ongoing global unease on their monthly outgoings. We have witnessed many household costs continue to rise, while consumer affordability regarding housing has prompted a wave of caution, subsequently tapping the brakes on house price growth currently.
“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.”
Rachel Geddes, Strategic Lender Relationship Director, Mortgage Advice Bureau, said, "Today's Lloyds House Price Index puts the average property at £298,468, down 0.2% in August. However, it's worth bearing in mind that almost nobody actually buys 'the average house.' It's a genuinely useful gauge of the market's overall direction, but the crux of the matter is what's happening to your specific type of property, in your specific area.
"As a first-time buyer, your local market can be moving in a completely different direction to the national one. The national figure won't tell you which one you're in, but it's exactly the kind of thing worth checking before you assume anything about affordability where you're actually looking.
"If you're moving home, the comparison that matters is your own: if both your current property and the next one have moved in value by similar amounts, the national average might barely touch your numbers at all. On the flip side, someone moving from a flat to a house could feel it very differently. Either way, it's your own numbers that matter.
"When you remortgage, what matters is what's happened to your own property's value - whether that's moved up, down, or stayed flat since you last checked. That difference changes your loan-to-value ratio, which changes what a lender will offer you. Working out what actually applies to you is where a mortgage adviser comes into their own, and it's worth having that conversation before you draw conclusions."
