UK house prices rise 0.2% in August
UK house prices increased 0.2% in August, the first monthly rise since April, according to Nationwide. The average home price is now £275,465, but remains below April's peak as the market awaits a key Bank of England interest rate decision.
UK house prices rose in August for the first time in four months. The average property price increased by 0.2% month-on-month to £275,465, according to data from the Nationwide Building Society.
This follows a revised three-month period of declines. Nationwide had initially reported a 0.1% rise for July but later corrected that figure to a 0.1% fall. Despite the August increase, the average home is still valued more than £3,000 below the £278,880 peak recorded in April.
Market in a 'holding pattern'
Analysts describe a cautious market. Ian Futcher, a financial planner at Quilter, said the UK housing market was in a holding pattern ahead of the Bank of England's next interest rate decision on 17 September. The Monetary Policy Committee will vote on whether to raise the base rate from its current 3.75%.
Futcher noted that while holding rates steady is the most likely outcome, it is becoming difficult to predict with confidence. For borrowers, he warned that rates may not have peaked.
Annual price growth and forecasts
On an annual basis, price growth accelerated slightly. Prices in August were 1.6% higher than the same month last year, up from a 1.4% annual increase in July. However, this growth fell short of the 2% rise economists had forecast.
Financial markets currently do not expect an interest rate increase this month. They are, however, pricing in a 0.25 percentage point rise by December.
Broader economic factors
Robert Gardner, Nationwide's chief economist, addressed the impact of rising energy costs. He said the latest increase in the energy price cap, which will push household bills to a three-year high this winter, had not yet affected housing market activity.
Gardner added that underlying affordability is improving as house price growth lags behind earnings growth, though higher mortgage rates have offset some of these gains.
Mortgage approval slump
Separate data from the Bank of England highlights ongoing market weakness. The number of mortgages approved for home purchases fell to its lowest level in over two years in July.
| Month | Mortgage Approvals for House Purchases |
|---|---|
| June | 58,215 |
| July | 56,053 |
The July figure of 56,053 approvals was the lowest since January 2024, when there were 56,032. Over the past six months, monthly mortgage approvals have averaged approximately 60,800.
Gardner suggested that activity should regain momentum in future quarters, provided the energy shock diminishes and confidence returns. The market now waits to see if the August price increase marks a turning point or a temporary pause in the downturn.
