Annual house price growth slowed to its weakest pace in over a year this August, as speculation builds over major reforms to property taxation in the upcoming Autumn Budget.
According to Nationwide, annual UK house price growth eased to 2.1%, down from 2.4% in July. On a monthly basis, prices slipped by 0.1%, leaving the average UK home at £271,079.
This marks the slowest annual increase since July 2024 and continues a trend of stagnation, with growth either flat or falling in six of the last eight months.
Affordability Pressures Persist
Robert Gardner, chief economist at Nationwide, explains:
“House prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, especially given the intense cost of living pressures in recent years.”
Nationwide notes that mortgage costs remain more than three times higher than in the aftermath of the pandemic. As of August, the average two-year fixed mortgage stood at 4.96%, while five-year deals averaged 5% (Moneyfacts).
Karen Noye, mortgage expert at Quilter, adds:
“While the economic backdrop remains challenging, today’s figures suggest the housing market is still managing to hold reasonably firm for now. Sustained momentum will depend on future interest rate decisions and whether upcoming policy decisions support or hinder market activity.”
Property Tax Reform Speculation
Reports suggest the government is considering a radical overhaul of property taxes, including:
- A National Insurance levy for landlords
- Removal of capital gains tax relief on selling higher-value homes
- Abolition of stamp duty
- Replacing council tax with a national property tax
Experts are divided. Some argue that scrapping stamp duty could stimulate transactions, while others warn it could cost billions in lost revenue and add new layers of uncertainty.
Jeremy Leaf, north London estate agent and former RICS residential chairman, notes:
“We are not surprised that prices have softened although agreed sales have held up well, supported by slowly improving affordability and recent reductions in the Bank of England Bank Rate. However, with so much property still overhanging the market, many buyers are seizing the opportunity of negotiating hard.”
Asking Prices Under Pressure
Rightmove data shows that 34% of properties reduced their asking prices in August, with the national average dropping 1.3% – the third consecutive monthly decline.
- Average asking price: £368,740
- Annual asking price inflation: just 0.3%
- London saw the steepest monthly fall at -2.6%
Colleen Babcock at Rightmove commented:
“Astute buyers are now benefitting from new seller asking prices which are on average £10,000 cheaper than three months ago. Buyers have the upper hand in this high-supply market, so a tempting price is vital to agree a sale.”
Despite softer prices, sales agreed are up 8% year-on-year, the strongest summer performance since 2020. More homes are also available, with stock levels up 10% compared to last year.
What’s Next for the Market?
The housing market outlook will hinge on:
- Bank of England interest rate decisions – further cuts could ease mortgage costs.
- Autumn Budget reforms – any changes to stamp duty or property taxes could reshape buyer behaviour.
- Broader economic trends – income growth versus inflation will be key to affordability.
For now, the market seems to be in a holding pattern, with buyers and sellers waiting to see how policy decisions unfold.
Final Thoughts
The slowdown in house price growth reflects affordability challenges, high borrowing costs, and pre-Budget uncertainty. Yet, resilience remains: transactions are strong, supply has risen, and well-priced homes continue to sell.
As tax reform debates heat up, buyers may gain more negotiating power, while sellers will need to remain realistic. The coming months could be pivotal for shaping the next phase of the UK property market.
