- Average house prices rose just 1.6% in the year to August to £275,465 (source: Nationwide – House price growth remained subdued in August)
- House prices rose by 0.2% in the month, based on seasonally adjusted figures
- Without adjustment house prices have been falling since April, with average prices down £3,415 since then
- Outlook for the housing market remains challenging
Sarah Coles, head of personal finance at AJ Bell, comments:
“It has been an arid summer for the property market. The figures show property prices have been clinging onto growth – up 1.6% in a year. However, since April, average non-seasonally adjusted prices are down £3,415. The climate looks equally challenging for the autumn too.
“This isn’t a surprise given the difficult backdrop. Prices remain close to record highs, which is putting them under pressure – particularly given how mortgage rates have been creeping up. Global instability has meant a volatile oil price, which raises fears of inflation and higher interest rates. These are getting priced into the mortgage market for fixed term rates, forcing some buyers to put their plans on hold.
“There are some positives lurking in the gloom though. The fact that wage rises are outpacing house prices offers some hope for affordability. And while mortgage rates have moved higher, they’re still a long way off the horrors of 2022 and 2023. Recent house sales figures show that while properties aren’t selling like hot cakes, they’re not going stale and being marked down dramatically either.
“An awful lot of what happens next depends on developments in the wider world. More stability would encourage buyers and sellers to get stuck in, and we’d be likely to see prices rise again as we enter a period that’s traditionally busier. However, instability has become such a fixture on the global political stage that we can’t rely on calm returning any time soon.
“It means we need to make plans based on change. It’s going to be vital not to over-stretch yourself or build your finances on the expectation that house prices will always rise. It’s worth building the biggest deposit you can, such as by using the Lifetime ISA to boost contributions by 25% if you qualify. It’s also important to negotiate where you can, and not to get carried away.”
