Are house prices falling? Nationwide’s latest House Price Index shows the market cooled in August, with average prices dipping by 0.1%.
While annual growth remains positive at 2.1%, affordability pressures and changing buyer sentiment suggest the market is entering a more price-sensitive phase.
Experts say the coming months could test how resilient house values really are and test those who are looking at buying a house.
House prices edge lower in August
New figures from Nationwide suggest that UK house prices may be losing momentum.
According to its latest House Price Index, average prices fell by 0.1% in August after seasonal adjustment, bringing the typical property price to £271,079. On an annual basis, growth slowed to 2.1%, down from 2.4% in July.
Robert Gardner, Nationwide’s Chief Economist, said: “August saw a slight softening in the rate of annual house price growth… Prices dipped by 0.1% month on month, after taking account of seasonal effects.”
While prices are still higher than a year ago, stretched affordability and high borrowing costs are making it harder for many buyers to step onto the ladder.
Affordability strains keep buyers cautious
Gardner highlighted that the cost of servicing a mortgage remains a key obstacle: “An average earner buying the typical first-time buyer property with a 20% deposit faces a monthly mortgage payment equivalent to around 35% of their take-home pay, well above the long-run average of 30%.”
Mortgage costs, still more than three times higher than post-pandemic levels, mean many buyers are either delaying purchases or negotiating harder on price.
However, Nationwide expects affordability to improve gradually if wages keep rising faster than house prices and if borrowing costs ease further in the months ahead.
Seasonal pause or market turning point?
Some industry experts argue that August’s slowdown reflects little more than summer distractions.
Marc von Grundherr, Director of Benham and Reeves, noted: “August’s marginal dip is no surprise… this is nothing more than a seasonal summer slump as our plans to move take a backseat in favour of holidays.”
But others see signs of a more fundamental shift. Jonathan Hopper, CEO of Garrington Property Finders, warned: “The fleeting summer surge in prices is fading faster than most people’s tans… in many parts of the country there are many more sellers than serious buyers, and this is allowing buyers to take their time and negotiate hard on price.”
Outlook for the rest of 2025
Despite the August dip, some remain optimistic about the months ahead.
Verona Frankish, CEO of Yopa, said: “The market may have paused over the summer, but the annual picture remains one of growth and resilience… the added motivation of moving before the festive season, combined with improving mortgage affordability, should help drive a strong finish to the year.”
The big question now is whether falling borrowing costs and rising incomes will be enough to counter buyer caution.
For now, the data shows that while house prices are not crashing, they are certainly under pressure, leaving many to ask whether this is the start of a sustained slowdown.
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The answer right now is that house prices are softening rather than falling sharply.
Nationwide’s data shows resilience, but affordability pressures remain high, especially with mortgage payments eating up more than a third of take-home pay for many buyers.
Looking ahead, the housing market could hinge on two key factors: mortgage rates and stamp duty. If borrowing costs continue to ease as expected, this should boost buyer confidence.
If you are planning on buying a house you may want to see our house viewing checklist and our guide on building surveys and mortgage rate rises. Also, if you are looking to sell, you can use our 'How much is my house worth?' guide to make sure you get a fair price.
