- Despite the monthly fall, it was the biggest annual rise since December 2022
House prices fell in August, according to the latest figures from Nationwide.
Britain’s biggest building society said that while average prices dropped 0.2 per cent this month, they had increased by 2.4 per cent in the year to August, up from 2.1 per cent in July.
This, it said, was the fastest pace of yearly growth since December 2022.
The last time prices dropped on a monthly basis was in April this year.
Down and up: House prices fell by 0.2% month-on-month in August, after taking account of seasonal effects, but annual house price growth continued to edge higher
Nationwide said the reason for this statistical quirk – monthly prices falling and yearly prices rising – is that there was also a fall recorded last year between July and August.
Nationwide also uses seasonal adjustment to smooth out months that are typically more and less active in the housing market, and without that adjustment the average fell by 0.36 per cent between July and August this year.
While home values may be up year-on-year, prices are still around 3 per cent below the all-time highs recorded in the summer of 2022.
Robert Gardner, chief economist at Nationwide said: ‘UK house prices fell month-on-month in August, after taking account of seasonal effects, but the annual rate of house price growth continued to edge higher.
‘While house price growth and activity remain subdued by historic standards, they nevertheless present a picture of resilience in the context of the higher interest rate environment and where house prices remain high relative to average earnings.’
What next for house prices?
Most organisations and experts across the property market are now forecasting that prices will finish the year slightly up.
The property portal, Zoopla, predicts house prices will finish the year 2.5 per cent higher.
The property firm Knight Frank is forecasting a 3 per cent shift upwards in annual growth, come December.
Looking further ahead, Knight Frank expects similar growth over the next four years.
It has forecast a further 3 per cent rise next year, followed by annual growth of between 4 per cent and 5 per cent between 2026 and 2028.
Recent high: Average prices were up 2.4% year-on-year, a slight pickup from the 2.1% recorded in July and the fastest pace since December 2022
The slightly more upbeat mood around property prices all stems from the fact that mortgage rates have been moving lower in recent months.
The lowest five-year fixed rates, reserved for those with 40 per cent deposits, are below 4 per cent. Those buying with deposits of 20 per cent can secure a five-year fix as low as 4.19 per cent and those buying with a 10 per cent deposit can secure as low as 4.59 per cent.
Jonathan Hopper, chief executive of Garrington Property Finders said: ‘The summer holidays are traditionally a slow time for both property viewings and offers, but buyer sentiment has been boosted by the growing realisation that we’re at last in an interest rate cutting cycle and that cheaper mortgages are appearing every week.’
Hopper says that prices are heading up in more affordable parts of the country but are still falling in more expensive locations.
He said: ‘On the front line we’re still seeing prices come down in the most expensive parts of London and the South East.
‘By contrast, prices are marching steadily upwards in more affordable locations and this has pushed the Nationwide’s annual rate of price inflation up to levels not seen since 2022.
‘With many buyers now back from holiday and setting themselves the goal of moving by Christmas, demand is likely to notch up markedly over the coming months. But the supply side of the equation should keep price rises in check.
‘With many buyers spoilt for choice and sellers keen to get a deal done, big discounts are still achievable.’
Tom Bill, head of residential research at Knight Frank added, ‘The housing market is in a better place than it was last summer as inflation comes under control and lenders trim their rates.
‘Financial markets are pricing in another cut this year and as mortgage rates fall this autumn, it should underpin transactions and modest single-digit price growth, which doesn’t necessarily chime with recent Government warnings about the state of the economy.’
