Nationwide latest house price index reveals that annual house price growth softened to 2.1% last month.
House prices were down 0.1% month-on-month.
| Headlines | Aug-25 | Jul-25 |
|---|---|---|
| Monthly Index* | 539.7 | 540.1 |
| Monthly Change* | -0.1% | 0.5% |
| Annual Change | 2.1% | 2.4% |
| Average Price(not seasonally adjusted) | £271,079 | £272,664 |
* Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)
Robert Gardner, Nationwide’s chief economist, says: “The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms. House prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, especially given the intense cost of living pressures in recent years.
“Combined with the fact that mortgage costs are more than three times the levels prevailing in the wake of the pandemic, this means that the cost of servicing a mortgage is also a barrier for many. Indeed, an average earner buying the typical first-time buyer property with a 20% deposit faces a monthly mortgage payment equivalent to around 35% of their take-home pay, well above the long run average of 30%.
“However, affordability should continue to improve gradually if income growth continues to outpace house price growth as we expect. Borrowing costs are likely to moderate a little further if Bank Rate is lowered again in the coming quarters. This should support buyer demand, especially since household balance sheets are strong and labour market conditions are expected to remain solid.”
But some commentators are already worried that the slew of property tax proposals floated in the media by the government last month may already be feeding in to hesitancy amongst buyers and sellers.
Tom Bill, head of UK residential research at Knight Frank, comments: “House prices have drifted lower since March as the market digests higher rates of stamp duty and supply continues to outstrip demand.
“Steady mortgage rates mean transaction numbers have improved over that time but the recent property tax speculation risks sending both sales and prices lower as buyers and sellers deal with pre-Budget uncertainty for the second year in a row.”
And Jonathan Handford, managing Director at Fine & Country adds: “A marginal 0.1% dip in house prices suggests the market is catching its breath rather than changing direction.
“Uncertainty around potential property tax changes in the autumn budget may also affect pricing and influence sellers’ willingness to be flexible. As we move into autumn, clarity on fiscal policy and mortgage conditions will be key to sustaining market momentum. While the property industry is highly adaptable, sweeping changes to taxation or policy risk unsettling activity in the short term.”
And Jeremy Leaf, the former residential faculty chair or the RICS and a London estate agent himself, adds: “With so much property still overhanging the market, many buyers are seizing the opportunity of negotiating hard whereas worried sellers often have no option but to agree revised terms in order for the transaction to proceed.
“Looking forward, we don’t see much change and certainly not much chance of a strong rebound in prices, given concerns about autumn tax rises, particularly for the property market.”
