The latest Halifax House Price Index shows it is the lowest annual house price growth so far this year, with the range going from 2.5% to 3.2%.
Looking at monthly house price growth, house prices ticked up by 0.3% in August, the third consecutive month of increases.
From a quarterly house price perspective, quarterly house price growth was estimated at 0.4%, which compares to a 0.1% drop in the prior month.
The average house price is £299,331, which Halifax said is getting close to a new record high.
The report stated that the average property price paid by first-time buyers came to £237,577, a drop of 0.6% since May.
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It added that for a 95% loan-to-value (LTV) mortgage over 30 years, monthly repayments would come to around £1,179, compared to the average private rent of £1,343.
Northern Ireland top of house price table
From a regional perspective, Northern Ireland continues to top the house price growth table, with average property values up 8.1% over the past year. This is a slight fall from 9.3% last month, and the average home is priced at £217,082.
Scotland came second, with its annual house price growth coming to 4.9%, with an average house price of £215,594.
Within England, there is a “clear North/South divide”, Halifax said, with the North East, North West and Yorkshire and the Humber reporting annual house price growth above 4%.
This compares to the South West, which saw a 0.8% decline over the same period and is the first UK nation or region to see a fall since July last year.
London experienced modest house price growth at 0.8% year-on-year, with the average property price coming to £541,615 – the most expensive in the UK.
‘Stability’ is story of 2025 housing market
Amanda Bryden, head of mortgages at Halifax, said the “story of the housing market in 2025 has been one of stability”.
She explained: “Since January, prices have risen by less than £600, underlining how steady the market has been despite wider economic pressures. Affordability remains a challenge, but there are signs of improvement. 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%.
“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. Summer is typically a quieter period for the market, so the recent rise in mortgage approvals to a six-month high is an encouraging sign of underlying demand.”
Bryden said that while the wider economic picture “remains uncertain”, the housing market in the past few years has shown it can “take these challenges in its stride”.
“Supported by improving affordability and resilient demand, we expect to see a slow but steady climb in property prices through the rest of this year,” she concluded.
August base rate cut fuelled momentum but short-term outlook uncertain
Tanya Elmaz, managing director of intermediary sales at Together, said the modest rise in house prices in August – after a significant increase in July – indicates a “level of confidence returning to the market”.
She said the base rate cut in August had helped fuel momentum, but factors such as the “gloomy economy and fluctuating swap rates cannot be ignored as potential detractors to continued house price growth over the rest of the year”.
“It may be months until the Bank of England’s next rate cut, and rumoured tax changes at the upcoming Autumn Statement, including a potential property tax on houses worth over £500,000, may dampen activity as buyers assess the unknown secondary impacts.
“That being said, there are plenty of opportunities out there. Those who are keen to move forward with their property ambitions should explore the range of financial products and schemes available. Speaking to a mortgage professional is a great way to assess all the options available before making a final decision,” Elmaz added.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that with the Autumn Budget set for 26 November and multiple rumours circulating around plans for the housing market, this “won’t help buyers and sellers commit to big decisions such as moving”.
“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, with some lenders including Nationwide starting to nudge their pricing upwards in recent days,” he noted.
