Annual growth in UK house prices slowed for the fourth consecutive month in August, according to figures from the Office for National Statistics (ONS). The average annual rate of price growth weakened to 0.9% in August, down from 1.2% in July, driven by slowing annual rates in six out of nine English regions.
Across the UK, the average house price in August stood at £273,000. In England, average prices rose to £294,000, representing 0.4% annual growth, while Wales saw prices reach £216,000 (3.1% annual growth) and Scotland £198,000 (2.9%).
London sees sharpest decline
In London, the average property value fell by 2.2% annually in August, driven by falling prices for flats, which decreased by 5.0% in the 12 months to August. Flats account for half of all property sales in London, compared with around a fifth across Britain, the ONS said.
The North East was the English region with the highest annual house price inflation, at 3.2%. The average house price for Northern Ireland was £202,000 in the second quarter of this year, increasing by 9.2% annually.
Rents and inflation rise
The ONS also reported that the average monthly private rent in the UK was £1,406 in September 2026, which is £52 (3.8%) higher than 12 months earlier. Figures released on Wednesday also showed that Consumer Prices Index (CPI) inflation was 3.5% in September, up from 3.1% in August. This was the highest since 3.6% recorded in October last year, and above a rate of 3.4% expected by some economists.
David Hollingworth, associate director at L&C Mortgages, said the inflation increase “is likely to cement expectation of a base rate rise to come in November”. He added: “Those coming to the end of a current fixed (mortgage) deal will not only face higher rates but also a more volatile market where deals can come and go quickly.”
Industry reaction to market conditions
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Borrowers should prepare for higher mortgage costs. Although the Bank of England held base rate at its last meeting, volatile swap rates, which underpin mortgage pricing, have resulted in mixed pricing movements by lenders with some trimming rates while others increase pricing.”
Karen Noye, a mortgage expert at wealth manager Quilter, said: “As we move towards winter, the picture facing prospective buyers is darkening. Today’s inflation figures will do little to improve the mood. CPI inflation jumped from 3.1% to 3.5% in September, with core inflation and services inflation also moving higher. That makes meaningful interest rate cuts harder to envisage and increases the risk of mortgage costs remaining higher for longer. Affordability is already stretched for many buyers and uncertainty over where mortgage rates go next is adding another reason to hesitate.”
She added: “There are some potential silver linings. The Budget should give us greater clarity on the Government’s plans to help first-time buyers, including further detail around the proposed first-time buyer Isa and the first homes scheme. If those measures genuinely improve affordability and help more people make the first step onto the property ladder, the benefits could travel further up the chain as existing owners are put in a stronger position to move.”
Nick Leeming, chairman of estate agency Jackson-Stops, said: “The Budget must support a housing market that works at every stage of people’s lives.” Nicky Stevenson, managing director of Fine & Country, said: “We may see some continued restraint in the short term, but this is a market that rewards realistic expectations rather than one that has ground to a halt. Sellers who price competitively from day one and buyers who are financially prepared can still find opportunities, even in a more demanding market.”
Tom Bill, head of UK residential research at Knight Frank, said: “The outlook for the UK housing market hinges uncomfortably on an overseas geopolitical risk, but downward pressure on prices could reverse quickly if the unpredictable Middle East conflict de-escalates or ends. As affordability constraints bite, it is no surprise to see the biggest price impact in London.”
Richard Donnell, executive director of research at Zoopla, said: “Homes that sell are doing so almost as quickly as last year, but buyers are becoming more selective, particularly when homes are not well presented or priced unrealistically for what buyers are willing to pay. There are serious buyers in the market but it’s essential to speak to an agent to understand how to reach them.”
Sarah Coles, head of personal finance at AJ Bell, said: “Property prices have barely risen over the year to September, up less than 1%. Rising mortgage rates have poured cold water over a market that was already sputtering in the face of rapidly rising prices, global instability and pricey property.”
