UK house prices fell on an annual basis for the first time since November 2023 in August, as economic uncertainty and high borrowing costs continued to weigh on demand.
According to Lloyds data, house prices fell by 0.2% month-on-month in August, with the average property value standing at £298,468, down from £299,153 in July.
On an annual basis, prices declined by 0.4%.
The slowdown comes as high interest rates and uncertainty over the economic outlook influence household decisions. Recent figures also showed that mortgage approvals had fallen to their lowest level since early 2024.
Prices remain above pre-pandemic levels
Despite the latest decline, the average UK house price remains around 25% higher than at the end of 2019, despite the significant increase in interest rates over the intervening period.
Lloyds mortgage director Andrew Asaam said wage growth had helped offset some of the pressure on households’ ability to purchase property.
“We expect the market to remain relatively subdued over the coming months, but this is likely to have a limited impact on house prices,” he said.
Although affordability remains a challenge, Asaam noted that wages continue to rise and employment has proved more resilient than expected. These factors are expected to support demand from people who need or want to move home.
London and South East see biggest declines
The picture varies significantly across the UK.
In South East England, house prices fell by 1.6% year-on-year, significantly more than the national decline.
In Greater London, prices dropped by 1.5%, while South West and East England recorded annual declines of around 1.2%.
Northern Ireland and Scotland, however, continued to record strong growth. Prices in Northern Ireland rose by 6.9%, while Scotland recorded an increase of 3.5%. Parts of northern England also posted positive growth.
Lloyds data differs from Nationwide
The Lloyds figures contrast with data published by Nationwide last week, which showed house prices rising by 0.2% in August, representing a slight acceleration from July.
Nationwide also revised its initial estimate for July, which had indicated a small decline, to show a 0.1% increase.
The two indices tend to move in the same direction over the longer term, although their monthly readings often differ because they are based on different mixes of properties.
The divergence can become more pronounced when transaction volumes are low, as they currently are. August is also traditionally one of the quieter months for the UK housing market.
Further signs of weakening demand came from Bank of England mortgage lending data. Mortgage approvals fell by 3.7% in July, pointing to weaker housing market activity in the coming months.
Also read: Why Europe is moving gold out of North America
For more videos and updates, check out our YouTube channel
