UK house prices fell 0.2% in August to £298,468, following a 0.1% decline in July, and the first annual decline since November 2023, figures from the latest Lloyds House Price Index (HPI) have revealed.

Prices were 0.4% lower than a year earlier, although they remained 0.2% higher than at the start of the year and around 25% above their December 2019 level.

The market remained subdued as higher borrowing costs and economic uncertainty encouraged buyers to wait while sellers resisted cutting asking prices, the HPI stated.

Mortgage approvals have also fallen to their lowest level since the start of 2024.

Andrew Asaam, mortgages director at Lloyds, said: "The housing market has faced a more difficult backdrop in recent months, with the impact of global events on inflation and borrowing costs creating greater economic uncertainty. What we're not seeing is a rush of homeowners cutting prices. But more are choosing to sit tight, with sellers reluctant to accept offers they feel are too low, while some buyers are waiting to see how conditions develop.

"We expect the market to remain fairly subdued in the months ahead, but limited this will likely only have a impact on house prices. While affordability remains a challenge, wages continue to grow and employment has held up better than many anticipated. This will help to support demand from those who need or want to move."

Northern Ireland continued to record the strongest annual growth at 6.9%, followed by the North East at 2.7%, North West at 2.0%, Scotland at 3.5% and Wales at 0.6%. By contrast, southern England continued to see prices fall, with the South East down 1.6%, the South West and Eastern England both down 1.2%, and Greater London down 1.5% over the year.

Commenting on the figures, Sarah Coles, head of personal finance at AJ Bell, said: “House prices haven’t dropped this low since last December. This isn’t a seismic shift in the property market, but a gradual change in direction like this can still ring alarm bells. The reason that property prices aren’t falling further is that sellers are refusing to cut their asking prices and buyers are biding their time, so properties are starting to sit around on the market for longer and mortgage approvals have dropped."

Coles added: “This is a depressing picture for home movers, but it does present an opportunity for first time buyers. Horribly high prices have made it incredibly difficult to get onto the property ladder, and if they come down off recent highs, it could bring properties within reach – especially if sellers are prepared to negotiate."

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