Britain’s housing market remained subdued in August, with house prices edging just 0.2% higher as uncertainty over interest rates and the wider economic outlook continued to temper activity.
Nationwide’s latest House Price Index shows annual house price growth remained broadly unchanged at 1.6%, pointing to a market that continues to make only modest progress.
The figures come amid renewed uncertainty for buyers, sellers and estate agents following volatility in expectations for the future path of Bank Rate.
Higher energy prices have added to inflation concerns, although Nationwide said there are signs that the latest energy shock is not feeding through significantly to underlying price pressures.
The lender also pointed to a further easing in private sector wage growth, potentially giving Bank of England policymakers more scope to assess whether tighter monetary policy will be required to bring inflation sustainably back to target.
Despite the subdued market, Nationwide believes the underlying affordability picture is gradually improving.
House price growth continues to run well below earnings growth, helping improve affordability for prospective buyers, although some of that benefit has been eroded by higher mortgage rates.
Robert Gardner, Nationwide’s Chief Economist, said: “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. 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.”
Being located in a National Park attracts a significant house price premium
Nationwide carried out some research to analyse the impact that a property being on a National Park has on house prices, after taking account of other factors.
Gardner commented: “National Parks are highly desirable areas to live in thanks to the beautiful countryside. Those living in the parks are ideally placed to make the most of the great outdoors and take advantage of a range of activities and amenities. Development is also controlled with limited new housing construction, which may also help to explain why house prices tend to be relatively high.
“Our analysis indicates that a home being located within a National Park attracts a 24% premium compared to a similar property elsewhere. This is around £66,500 in cash terms based on UK average house price in Q2 2026 (£278,784).
“We also see a ‘fringe benefit’ for properties located close to National Parks. Those within 5km (around 3 miles) of a National Park command a 6% premium compared with those outside this range.
“We also explored the impact of being within a ‘National Landscape’ area in England & Wales (also known as Areas of Outstanding Natural Beauty (AONBs)), which include places such as the Surrey Hills, Cotswolds and Chilterns.
“We found that properties in these areas attract a 14% price premium (over an otherwise identical property). These areas include some highly desirable locations, and the premium is likely to reflect the continued attractiveness of rural areas and the associated lifestyle.”
Industry reaction:
“The wider economy continues to be finely balanced, with many factors continuing to prove an unwelcome undercurrent for consumer affordability. 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.
“A key moment for many households will come with the next base rate decision due mid-month, closely followed by what might be included in the forthcoming Autumn Budget at the end of October.”
Jason Tebb, president of OnTheMarket: “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.
“However, market resilience continues to be evident even while higher mortgage costs and economic uncertainty bring an element of caution. The market has steadied, helped by a calm hand at the tiller from the Bank of England with consecutive interest rate holds allaying fears and helping with affordability.
“Should mortgage rates remain stable and economic uncertainty eases, this could filter through to renewed activity and sales in the autumn. Inactivity isn’t an option for many, even if a new Prime Minister and another Budget brings an inevitable degree of doubt.”
Nicky Stevenson, managing director of Fine & Country: “The latest Nationwide figures reinforce the picture of a housing market that is moving forward, but at a measured pace. A 1.6% annual increase in house prices is neither boom nor bust, but reflects a market maintaining a solid baseline of activity while buyers remain highly selective.
“One of the biggest factors shaping the market is the increased choice available to buyers. The overall stock of homes for sale is around 5% higher than a year ago, giving purchasers more options and helping to keep house price inflation in check. At the same time, homes are taking longer to find a buyer, underlining just how important realistic pricing and strong presentation have become.
“There is activity in the market and transaction levels show that people are still moving, but buyers are taking longer to make decisions and are less willing to compromise. Properties that are correctly priced and stand out from the competition are attracting attention, while those that come to market with unrealistic expectations can struggle.
“As we head into the autumn, we expect activity to improve from the summer slowdown, although uncertainty around inflation, mortgage rates and the wider policy environment will continue to limit stronger price growth. For both buyers and sellers, the key message is that national house price figures only tell part of the story. Local market conditions can vary significantly, and understanding supply, demand and pricing in your particular area will be more important than ever this autumn.”
Jeremy Leaf, north London estate agent: “Although prices are still fairly flat – up a bit, down a bit – that’s probably a good result as far as assessing current market health is concerned. Even more so as this data from the country’s largest building society is linked to customer mortgage approvals meaning these figures represent an albeit modest vote of confidence in the future.
“Continuing price sensitivity prompted particularly by mortgage rate and affordability concerns as well as the likelihood of property tax rises in the Budget have been playing on buyers’ minds.
“In our offices, we’re finding the sellers concentrating on the difference between what they’re receiving and what they’re having to pay rather than asking price – bearing in mind four out of five are buyers – are more likely to move, though less quickly as there’s so much choice – and often only after serious negotiations.”
Amy Reynolds, head of sales at Antony Roberts: “On the ground, we are seeing prices remain flat with sensible offers being accepted. There are more sellers than buyers, but sellers aren’t panicking – asking prices are coming down, but a lot of that is due to initial overpricing meeting the time it takes to find the market level.
“We are seeing a bit of competition over certain new instructions, but when it comes to smaller flats there remains more supply than demand. However, over the summer we have agreed more flat sales, and it feels as though there is some life in this market.
“Hopefully, the market will continue to gather momentum as we move into autumn and doesn’t prematurely slowdown in advance of the Budget, as was the case last year. As for the Budget, it should focus on the property market’s recovery, so that people feel confident enough to move.”
Iain McKenzie, CEO of The Guild of Property Professionals: “Annual house price growth holding broadly steady at 1.6% in August, alongside a 0.2% monthly increase, suggests the housing market continues to demonstrate a reassuring degree of resilience despite a more subdued summer than usual.
“Many buyers have understandably been sitting on the sidelines over recent months, with higher mortgage costs, economic uncertainty and anticipated policy changes encouraging people to take their time. However, there are early signs that this caution could begin to ease as we move into autumn. The number of people searching for homes is rising, with Zoopla reporting a 7% year-on-year increase in buyer searches and growth across every region for the first time in a year.
“Search activity does not translate immediately into sales, but it is an important early indicator that more buyers are beginning to consider their options. With house price growth continuing to lag earnings growth, underlying affordability is gradually improving, even if higher mortgage rates have offset some of those gains.
“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 market is unlikely to see rapid price growth, but steady growth remains the most likely outcome. There are still plenty of people who need or want to move, and when the right property comes to market at the right price, buyers are willing to act.”
Mark Harris, chief executive of mortgage broker SPF Private Clients: “Flat monthly house prices indicate that those focused enough to buy over the summer months were not willing or perhaps able to pay over-the-odds but took advantage of the buyers’ market and negotiated accordingly.
“Lenders mostly continue to trim their mortgage rates, while the Bank of England’s steady approach to base rate is conveying calm after a period of Swap rate volatility.
“Borrowers are taking nothing for granted though as the continued high cost of living strains affordability. Many are taking the sensible approach of locking into mortgage rates several months before they need them for peace of mind.”
Tomer Aboody, founding director of MT Finance: “Nationwide’s data points to a housing market which continues to soften.
“With another change in prime minister and the prospect of more taxation on the way in the autumn budget, understandably buyers and sellers are reluctant to make a move unless essential.
“While other political parties have proposed cutting stamp duty, and some have even mooted the prospect of getting rid of it altogether, will the government respond with something similar to get the property market moving? It would be a step in the right direction and give the economy a real boost this autumn.”
