A slight fall in house prices reflects a “fairly subdued” market but ongoing resilience remains encouraging, many property experts agree.
The latest house price index from Lloyds shows a 0.2% reduction in the average house price in the UK, marking the first annual fall since November 2023.
“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”, Andrew Assam, mortgage director at Lloyds, said.
“What we’re not seeing is a rush of homeowners cutting prices”, he added – leading buyers to wait and see how conditions develop. Assam expects the market to remain “fairly subdued” in the months ahead, but believes wage growth and employment figures should “help to support demand”.
Charlotte Harrison, CEO of homes at Skipton Building Society, said the ongoing resilience of the market is “encouraging” but pointed out the real picture is very different depending on prospective buyers’ area and stage of life.
“While there are signs that affordability is improving slightly, the latest Skipton Group Home Affordability Index shows that many first‑time buyers remain under significant pressure”, she said.
“Housing costs continue to account for more than 45% of household income for many, leaving little capacity to save for a deposit. Rising rental costs are compounding this challenge, making it harder for would‑be buyers to get ahead.”
Iain McKenzie, CEO of The Guild of Property Professionals, echoed the message of market resilience. He said: “The latest Lloyds data underlines just how resilient the UK housing market is proving to be in an unusually challenging economic environment. A 0.2% monthly fall in prices is hardly a dramatic correction, particularly when households are contending with renewed inflationary pressure, higher energy costs and mortgage rates that remain elevated.
“The key question now is whether we are seeing a temporary summer pause or the start of a more sustained period of softer activity. Transaction volumes remain relatively healthy, while improving consumer confidence and the early signs of an autumn recovery in buyer searches suggest there is still underlying demand in the market.
“The next few months will be telling. If mortgage rates remain broadly stable and confidence continues to improve, the traditional autumn uplift in activity could provide some momentum. But affordability remains the defining constraint, so any recovery is likely to be measured rather than dramatic.”
In a less positive tone, Tomer Aboody, founding director of specialist lender MT Finance, believes the messages coming from Andy Burnham’s camp are negatively influencing the market.
“A fall in average house prices in August comes as no surprise with the new prime minister already indicating further and harsher taxes to come for both homeowners and landlords. Trying to squeeze every house owner further isn’t the way to encourage the economy or help it flourish.
“How well the year finishes for the housing market will depend on whether or not Andy Burnham is advised against further punitive taxes.”
Similarly, Anthony Codling, managing director, equity finance at RBG Capital Markets, believes sellers are adopting a wait-and-see approach in “a market under meaningful pressure from multiple directions”.
He added: “Sellers are not panicking and cutting prices aggressively; they are simply sitting tight. Buyers, meanwhile, are waiting for clarity on the path of interest rates.
“Mortgage approvals at their lowest since January 2024 confirm that activity, not value, is bearing the brunt of the adjustment. The north-south divide in performance continues to sharpen, and with swap rates spiking to three-year highs in early September, the near-term backdrop is challenging.”
Propertymark CEO Nathan Emerson agrees political uncertainty has had an impact on the market, but is hopeful of a recovery.
He said: “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.”
