UK house price growth weakened for the fourth consecutive month in August, according to the latest figures from the Office for National Statistics (ONS).
Annual house price inflation fell to 0.9% in August, down from 1.2% in July. The slowdown was partly driven by weaker price growth across six of England’s nine regions.
The average UK house price stood at £273,000 during August. Across the home nations, prices varied considerably, with England recording an average of £294,000, up 0.4% year on year. Wales saw average prices reach £216,000, an annual increase of 3.1%, while Scotland recorded a 2.9% rise to £198,000.
Northern Ireland experienced stronger growth, with the average house price reaching £202,000 in the second quarter of 2026, representing a 9.2% increase compared with the same period a year earlier.
London Prices Fall as Flat Values Decline
London remained under pressure, with average property prices dropping by 2.2% in the year to August. Flat prices were a significant factor, falling by 5% over the same period.
The ONS noted that flats make up around half of all property sales in London, compared with approximately one-fifth across Britain. This greater concentration means falling flat prices can have a notable impact on the capital’s overall housing market.
By contrast, the North East recorded the strongest annual house price growth of any English region, at 3.2%.
Rising Inflation Adds Pressure on Mortgage Costs
The ONS also reported that average monthly private rents reached £1,406 in September 2026, an increase of £52, or 3.8%, over the previous 12 months.
Separate figures released on Wednesday showed that Consumer Prices Index (CPI) inflation rose to 3.5% in September, up from 3.1% in August. The rate was the highest since October last year, when inflation reached 3.6%, and exceeded the 3.4% forecast by some economists.
The rise has raised concerns about the prospect of interest rate cuts and the impact on mortgage borrowers.
David Hollingworth, associate director at L&C Mortgages, said the latest inflation figures were likely to strengthen expectations of a potential Bank of England base rate increase in November.
He warned that borrowers approaching the end of fixed-rate mortgage deals could face both higher borrowing costs and a more unpredictable market, where mortgage products may be withdrawn or repriced quickly.
Mark Harris, chief executive of mortgage broker SPF Private Clients, also cautioned that borrowers should prepare for potentially higher mortgage costs. Although the Bank of England held its base rate at its previous meeting, changes in swap rates, which influence mortgage pricing, have led lenders to take different approaches, with some reducing rates while others increase them.
Buyers Face Greater Affordability Challenges
Karen Noye, a mortgage expert at wealth manager Quilter, said the outlook for prospective buyers was becoming more difficult as winter approached.
She pointed to rising headline, core and services inflation as factors that could make significant interest rate cuts less likely, potentially keeping mortgage costs elevated for longer. With affordability already stretched, uncertainty over future rates may cause some buyers to delay their plans.
However, Noye said the upcoming Budget could provide greater clarity on government support for first-time buyers, including further details about the proposed first-time buyer ISA and First Homes scheme.
If these measures improve affordability and help more people purchase their first home, the benefits could extend to the wider market by enabling existing homeowners to move more easily.
Nick Leeming, chairman of estate agency Jackson-Stops, similarly stressed that the Budget should support the housing market across all stages of homeownership.
Realistic Pricing Remains Essential
Despite the challenges, property professionals say the market continues to offer opportunities for buyers and sellers who are well prepared.
Nicky Stevenson, managing director of Fine & Country, said some restraint could persist in the short term, but the market had not come to a standstill. Sellers who set realistic asking prices from the outset and buyers who have their finances in order could still achieve successful transactions.
Tom Bill, head of UK residential research at Knight Frank, highlighted geopolitical uncertainty as a significant factor influencing the housing market. He suggested that downward pressure on prices could ease if the conflict in the Middle East de-escalated, while noting that affordability pressures were particularly evident in London.
Richard Donnell, executive director of research at Zoopla, said properties that sell are doing so at a pace broadly similar to last year. However, buyers are becoming more selective, particularly when homes are poorly presented or priced beyond what the market is prepared to pay.
He added that serious buyers remain active, but sellers need to work with estate agents to understand how best to reach them.
With house price growth slowing, inflation rising and mortgage pricing remaining uncertain, realistic valuations and careful financial planning are likely to remain important for anyone looking to buy or sell a property.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property