UK house prices dipped in August, marking the first fall in four months, even as the annual rate of growth in the cost of a property remains at a high of more than 18 months.
Nationwide said the average house price in the UK was £265,375 in August, down 0.2% on the previous month.
The month-on-month drop is the first since April, reversing monthly increases of between 0.2% and 0.4%, although the price of an average UK house remains at its highest level since October 2022.
The annual rate of house price growth rose to 2.4% in August, up from 2.1% in July and 1.5% in June, the fastest rate since December 2022.
The previous high of 2.8% came after the former prime minister Liz Truss and the ex-chancellor Kwasi Kwarteng’s disastrous mini-budget, which led to a sharp increase in borrowing rates for buyers.
“UK house prices fell 0.2% month on month in August, after taking into account seasonal effects, but the annual rate of house price growth continued to edge higher,” said Robert Gardner, the chief economist at Nationwide.
“While house price growth and activity remains 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 – which makes raising a deposit more challenging.”
Earlier this month, the mortgage lender Halifax forecast that UK house prices would continue to grow throughout the rest of this year, as mortgage rates begin to drop after the Bank of England’s decision to cut interest rates.
The Bank reduced rates from 5.25% to 5% earlier this month, the first cut in four and a half years.
However, it said savers should not expect more large cuts in the coming months as it attempts to ensure the rate of inflation does not return to the high levels hit over the last two years.
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Verona Frankish, the chief executive of the online property seller Yopa, said the new figures provided the first look at house price performance since interest rates were cut at the start of August. “Despite the very marginal monthly decline, it’s clear that the first reduction in four months has helped to further boost the market momentum, with yet another strong rate of annual house price growth being seen,” she said.
Frankish added that while rates remained “considerably higher” than buyers and sellers have been used to, the expectation of the Bank of England making another cut this year “should only help to strengthen buyer appetites further”.
