UK house prices edge higher as buyers remain cautious amid economic uncertainty

UK house prices edged higher in August, with values rising 0.2 per cent month on month after a 0.1 per cent decline in July, according to the latest Nationwide index.

The increase left annual house price growth at 1.6 per cent in August, up from 1.4 per cent in July. The average UK property was worth £275,465, Nationwide Building Society said.

Despite the modest improvement, the figures point to a housing market that remains subdued as prospective buyers contend with elevated borrowing costs, uncertain economic conditions and renewed pressure on energy prices.

Robert Gardner, Nationwide’s chief economist, said: “Market activity and house prices have remained subdued in recent months, in part reflecting the uncertain economic backdrop.

“Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices and market interest rates.

“Market expectations of the future path of (the Bank of England base rate) have been volatile.

“While the latest energy price shock poses inflation risks, there have been encouraging signs that it is not feeding through to underlying price pressures.

“Indeed, private sector wage growth has eased further in recent months, which should give policymakers breathing space to assess the extent to which tighter policy is necessary to ensure inflation returns sustainably to target.”

Gardner said the longer-term affordability picture was improving, although higher mortgage rates continued to offset some of the benefit from slower house price growth.

“Underlying affordability is improving, as house price growth remains well below earnings growth although some of these gains have been offset by higher mortgage rates,” he said.

“Nevertheless, this suggests that activity should regain momentum in the quarters ahead providing the energy shock wanes and confidence returns, especially if market interest rates fall back towards pre-conflict levels.”

Nationwide said its July 2026 house price index had been revised following a system change.

The latest figures come as the housing market continues to adjust to a combination of relatively weak consumer confidence, elevated mortgage costs and uncertainty over the future path of interest rates.

Nathan Emerson, chief executive of Propertymark, said household finances remained under pressure.

“The wider economy continues to be finely balanced, with many factors continuing to prove an unwelcome undercurrent for consumer affordability,” he said.

“Across the year to date, there have been many challenges to navigate, with average energy prices climbing, inflation still higher than targeted and the base rate remaining higher than many might prefer.”

The market’s subdued performance has also been reflected in the behaviour of buyers, with purchasers increasingly focused on negotiating prices rather than bidding aggressively.

Jason Tebb, president of OnTheMarket, said: “Broadly stable property values indicate a subdued market as focused buyers, prepared to make their move during the usually quieter summer period, proved to be ‘price sensitive’ in their negotiations.”

The outlook could improve if borrowing costs stabilise and buyers gain greater certainty over the economic and policy environment.

Iain McKenzie, chief executive of The Guild of Property Professionals, said: “We would expect activity to build through the autumn, provided mortgage rates remain broadly stable and there is greater clarity around the policy outlook.”

The August figures suggest the UK housing market has entered a period of relative stability rather than a renewed acceleration in prices. With annual growth still running well below earnings growth, affordability is gradually improving, but the pace of any recovery remains dependent on mortgage rates, inflation and household confidence.