UK house prices increased by 0.3% in August, bringing the cost of the average home to a record high of £299,33, the latest house price data shows.
It means house prices have now risen for three months in a row, according to Halifax’s house price index.
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“Interest rates have been on a gradual downward path for nearly two years, and many of the most competitive fixed-rate mortgage deals now offer rates below 4%,” she comments.
“Combined with strong wage growth – which has outpaced house price inflation for nearly three years – this is giving more prospective buyers the confidence to take the next step.”
How have house prices performed in different parts of the UK?
Northern Ireland continues to lead the UK for annual house price growth, with average property values up 8.1% over the past year, according to Halifax.
However, this marks a slight slowdown from the 9.3% annual growth seen last month. The typical home now costs £217,082.
Scotland saw the next strongest annual increase with prices rising 4.9% in August to an average of £215,594.
In Wales, house prices rose 1.6% year-on-year, though the pace of growth has eased in recent months. The average home now costs £227,786.
Across England, there remains a clear North/South divide. The North East, North West, and Yorkshire and the Humber all recorded annual growth above 4%, making them the fastest-rising regions.
By contrast, the South West saw prices fall 0.8% over the past year, the first UK nation or region to record an annual decline since July 2024.
In terms of London house prices, the capital continues to see modest growth, with prices up 0.8% year-on-year. It remains the most expensive part of the UK, with an average property value of £541,615.
What’s the outlook for house prices?
Property experts have broadly welcomed the Halifax house price data, saying it reflects a resilient and steady housing market.
Tomer Aboody, director of specialist lender MT Finance, says: “Lower mortgage rates, combined with sellers pricing more sensibly even though the national average house price is at a record high, is encouraging buyers to transact and take advantage of finding themselves in a reasonably strong position.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, adds: “Another cut in interest rates in August gave a further boost to confidence and activity in the housing market.”
Last month, the Bank of England reduced the base rate from 4.25% to 4%.
However, there is uncertainty ahead in the shape of the looming Autumn Budget, which will take place on 26 November.
Most Budget rumours so far have revolved around property, with speculation about National Insurance being applied to rental income and a national property tax that would replace stamp duty.
The chancellor is also said to be mulling a mansion tax for homes by introducing a capital gains tax charge on properties that sell for more than £1.5 million.
Indeed, Zoopla says that property tax speculation risks creating uncertainty for a third of home buyers.
Aboody notes: “The constant uncertainty of ‘what next?’ from the chancellor is not helping the market. The property market is important to the wider economy with any further increases in tax and costs having a negative knock-on effect.”
According to Harris, if rumours and speculation as to what the Budget may contain continue to circulate, it “won’t help buyers and sellers commit to big decisions such as moving”.
He comments: “Swap rates, which heavily influence the fixed-rate mortgage market, continue to rise as money market expectations of where interest rates are heading have changed amid concerns over inflation. This market uncertainty could result in short-term increases at least in mortgage rates."
In terms of the outlook for house prices, Halifax expects to see a “slow but steady climb” through the rest of this year.
Zoopla predicts that UK house price inflation will continue in a range of 1.5-2% during the last few months of 2025.
Meanwhile, Knight Frank expects price growth this year “to hover not far above zero” due to “supply still outweighing demand”.
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