This was the biggest August house price fall in eight years, as asking prices averaged 1% below this time last year. This was also the largest annual drop since 2023.
Mortgage rates remain elevated, up from 4.95% last month to 5.09% this month.
Matt Smith, mortgage expert at Rightmove, said: “Confidence has taken a bit of a hit as fixed rates remain elevated and return above the psychologically important 5% mark.
“However, the mortgage market remains highly competitive, with lenders still keen to attract business and support borrowers. Many lenders have built greater resilience into their pricing, meaning they are generally better prepared to absorb shorter-term market shocks, which gives movers more stability even during periods of uncertainty.
“There are signs that, because of this additional buffer that lenders have built in, there is some scope for mortgage rates to reduce over the coming weeks, despite the geopolitical landscape still being quite volatile, and they have already started to edge downwards.”
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North East continues to buck the trend
All month-on-month prices saw a drop across all UK regions, bar the North East, which recorded a 0.6% increase.
Year-on-year, prices in the North of England were up by 1.5% versus a year ago, while prices in the South of England were down by 1.8%.
The largest drop was in London, with prices down by 3.1%. The North West, however, recorded the largest increase in prices year-on-year by 1.9%.
Colleen Babcock, property expert at Rightmove, said: “This month’s larger-than-usual August price drop is a sign that many sellers are recognising the reality of the market and pricing much more competitively from day one. Buyers have the widest choice of homes for sale at this time of year in more than a decade, so standing out on price for the right reasons is hugely important.”
Average asking price decreases for FTBs
The national average for a first-time buyer home in August was down 0.3% since July and the same period last year to £225,525.
For second-steppers, the average price decreased by 1.3% since last month and 0.7% since last year to £341,807.
The biggest change was for homes at the top of the ladder, with the monthly change in asking price down by 2.8% to £667,056, and yearly down by 0.8%.
London, however, faces the most strained for affordability. The average home in London now costs around 17 times the national average annual salary. It is also 38% more expensive than in the South East.
London’s housing stock also contains a much larger proportion of flats than other regions. Buyer hesitancy around leasehold costs have made them a less appealing route into homeownership.
Marc von Grundherr, director of Benham and Reeves, said: “I wouldn’t characterise the London market as being in any sort of serious decline. What we’re seeing is a much more price-sensitive market and sellers who acknowledge that are still finding buyers. The difficulty arises where asking price expectations remain anchored to a market that no longer exists, and that is particularly evident within parts of the flat market where buyers are also scrutinising service charges, lease terms and the wider cost of ownership far more closely than they perhaps did previously.”
Buyers secured quickest in Scotland
The number of available homes for sale was at a 12-year high for this time of year.
However, the disparity between England and Scotland in how long it took to secure a buyer was 20 days. Scotland reported an average 32-day wait, while the North East had the shortest wait in England at 52 days.
The slowest market was London, with an average of 73 days needed to find a buyer.
Since Andy Burnham became Prime Minister on 20 July, there has been a mini bounce in buyer demand, up by 5%. However, buying activity was still 10% lower than last year.
However, Rightmove said this boost could pave the way for a busier autumn after the subdued summer.
