UK House Price Growth Softens In August

(RTTNews) - UK house prices logged a slower pace of growth in August due to stretched affordability, the Nationwide Building Society said Monday.

House prices increased 2.1 percent on a yearly basis in August, slower than the 2.4 percent rise seen in July.

On a monthly basis, house prices edged down 0.1 percent, in contrast to the 0.5 percent increase in the previous month. Prices were forecast to rise 0.1 percent.

"The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms," Nationwide's Chief Economist Robert Gardner said.

Gardner said, "House prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, especially given the intense cost of living pressures in recent years."

However, he observed that affordability should continue to improve gradually if income growth continues to outpace house price growth as anticipated.

Nationwide expects borrowing costs to moderate a little further if Bank Rate is lowered again in the coming quarters. These rate cuts are likely to support buyer demand, especially since household balance sheets are strong and labour market conditions are expected to remain solid.

The Bank of England had reduced its benchmark rate by 25 basis points last month, which was the fifth cut since August 2024. The current 4.00 percent is the lowest since early 2023.