UK House Prices Fall 0.1% in August Amid Tax Uncertainty

UK house prices fell by 0.1% in August, marking the second consecutive monthly decline and reversing July's 0.5% growth, with the average price now at £271,079. Annual growth slowed to 2.1%, reflecting ongoing affordability challenges as mortgage costs remain elevated, more than three times higher than pandemic levels. Robert Gardner, Nationwide's chief economist, highlighted that house prices remain high relative to household incomes, making it difficult for prospective buyers to raise deposits, especially amid intense cost-of-living pressures. The average first-time buyer faces mortgage payments amounting to about 35% of take-home pay, above the long-run average of 30%. Speculation about upcoming changes to property taxes, including stamp duty, council tax, and capital gains tax in Chancellor Rachel Reeves' Autumn Budget, contributes to market uncertainty, particularly affecting pricier homes in London and the southeast. However, Gardner expressed cautious optimism that affordability could improve if incomes rise faster than house prices and borrowing costs ease further with potential interest rate cuts.