Key facts
- UK house prices recorded their biggest August slump since 2018.
- The average house price fell by 2% this month to £364,999.
- Year-on-year house prices are down 1%, the largest annual drop since December 2023.
- London's housing market is the most affected, with prices falling 3.1% in the year to August.
- Rightmove has lowered its forecast for national house price growth to between 0% and -2%.
UK house prices have experienced their most significant August decline in eight years, with a 2% drop to an average of £364,999. This marks the largest annual decrease since December 2023, with prices down 1% year-on-year. The capital's property market is particularly affected, showing a 3.1% fall in prices over the past year, attributed to higher mortgage rates and concerns about potential tax increases in the upcoming Chancellor's Budget.
While house prices in the north of England have seen a modest 1.5% rise, the south of England has experienced a 1.8% year-on-year decrease. Property portal Rightmove has consequently revised its forecast for national house price growth to a range of zero to minus two percent for the remainder of the year.
Rightmove noted that a recent 'mini Burnham bounce,' attributed to renewed optimism following the appointment of a new Prime Minister, was insufficient to counteract the prevailing market sentiment. Buyers and sellers are anticipating potential property tax reforms in the October Budget. London faces additional affordability challenges due to high price-to-income ratios and significant stamp duty fees, particularly impacting first-time buyers with the £450,000 cap on lifetime ISAs.
Adding to market pressures, the ongoing geopolitical situation, including the Iran war, has contributed to mortgage rates remaining higher than anticipated. Experts suggest that rising mortgage rates and uncertainty surrounding tax changes will continue to suppress demand and limit price growth throughout the year.