HOUSE prices fell slightly in August, down -0.2%, following a -0.1% decrease in July according to Lloyds. The average property price now stands at £298,468 compared with £299,153 in July. On an annual basis prices have fallen by -0.4%, the first year-on-year decrease since November 2023.
One mortgage expert said “what we’re seeing right now is a clear gap between what sellers think their home is worth and what the market will pay”.
Meanwhile, a conveyancer added: “We have observed a 25% reduction in activity across the end of July and the entirety of August — driven by a decrease in buyer demand.”
Andrew Asaam, Mortgages Director at Lloyds, said: “UK house prices fell slightly in August, down -0.2% over the month following a similar decline in July. The average property now costs £298,468, marking the first annual fall in house prices since November 2023. Despite that, prices are still marginally up (+0.2%) since the start of the year.
“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.
“What we’re not seeing is a rush of homeowners cutting prices. But more are choosing to sit tight, with sellers reluctant to accept offers they feel are too low, while some buyers are waiting to see how conditions develop.
“As a result, fewer homes are changing hands, with latest industry figures showing mortgage approvals now at their lowest level since the start of 2024.
“It’s also important to keep recent price movements in perspective. Average house prices remain around 25% higher than they were at the end of 2019, despite the substantial increase to interest rates seen over recent years.
“The market’s adjustment to higher borrowing costs has been gradual, with wage growth helping to offset some of the pressure on affordability. The recent modest declines in prices are best viewed in that wider context.
“We expect the market to remain fairly subdued in the months ahead, but this will likely only have a limited impact on house prices.
“While affordability remains a challenge, wages continue to grow and employment has held up better than many anticipated. This will help to support demand from those who need or want to move.”
As has been the case for several months, there remains a clear divide in house price performance across the UK.
Northern Ireland continues to record the strongest annual growth, with prices up +6.9% year-on -year. While that’s a slower pace than seen recently, the average property value now stands at an all -time high of £231,245.
Scotland also continues to see solid growth, with prices rising +3.5% over the past year to an average of £223,437. In Wales , annual growth stands at +0.6%, taking the typical property value to £230,282.
Within England, growth remains strongest in northern regions. The North East recorded annual growth of +2.7%, taking the average property price to £184,370, while the North West saw prices rise +2.0% to £248,675.
By contrast, price growth remains under pressure across much of southern England, reflecting the greater affordability challenge caused by higher average prices.
The South East saw the largest decline, with prices down -1.6% year -on -year to £381,729, followed by Greater London, where prices fell -1.5% to £534,177. The South West and Eastern England both recorded annual declines of -1.2%, with average prices of £298,807 and £ 331,410 respectively.
Craig Fish, Director at London-based Lodestone Mortgages, said: “What we’re seeing right now is a clear gap between what sellers think their home is worth and what the market will pay.
“When buyers push back on an inflated price, valuations often come in fine at the lower figure, which says the property was overpriced, not that lenders are being cautious.
“Demand hasn’t dried up, more first-time buyers are viewing than a few months ago, but it’s taking longer to match a buyer to a property at the right price.
“Realistically priced homes are still selling close to asking, while the ones losing out are sellers whose agents talked up an ambitious price to win the instruction and can’t deliver it.
“In those cases, the property sits, loses momentum day by day, and gets chased down anyway, often lower than if priced right from the start.
“We’re seeing hardly any pull-outs, buyers commit once they find the right home, they’re just taking longer to find it. This correction is affordability, not nerve.”
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, added: “People sitting on their hands seems to be the key takeaway of the summer, which is partly understandable after the mortgage rate volatility of 2026.
“The other clear message coming from the market is that properties that are not priced realistically will struggle to sell.”
Adam Stiles, Managing Director at London-based Helix Financial Partners, said: “With rates going up and boundless volatility in the market, many buyers are being cautious.
“Buyers and developers alike are quite often applying a ‘wait and see’ strategy. Combining this with so much stock on the market idling for months, it’s no wonder we have seen this index edge down slightly. More confidence in the market will bring this back.”
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, said “house prices edging down slightly does not mean buyers suddenly feel the market has become cheap”.
He continued: “The bigger issue we’re seeing at present is monthly affordability: buyers are much more focused on the payment than the headline asking price, and that makes them quicker to negotiate or walk away if a property feels stretched.
“Sensibly priced homes can still attract committed buyers, but over-ambitious asking prices are more likely to sit. The market feels selective rather than weak, with affordability and realistic pricing doing far more to determine whether a transaction moves than small monthly changes in an index.”
Tracey Dixon, Owner at Cardiff-based Pure Mortgage and Protection, said: “From the mortgage desk, demand hasn’t disappeared, but buyers are noticeably more cautious and price-sensitive. They’re still viewing and making offers, although often below the asking price, with monthly affordability driving decisions more than headline house prices.
“Realistically priced properties are still attracting interest, while those launched too ambitiously tend to sit on the market. Compared with June, buyers appear more willing to negotiate and less prepared to stretch themselves just to secure a property.”
Chris Barry, Director at London-based Thomas Legal, said: “We have observed a 25% reduction in activity across the end of July and the entirety of August — driven by a decrease in buyer demand.
“Across the south of England, many agents were holding new to market stock in the hope that launching at the start of September would generate some new interest but this isn’t the only factor at play here.
“Whilst usually a busy autumn precedes a quiet summer, this is not guaranteed in the wake of a potential rise in borrowing costs and an uncertain Budget ahead.”
