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Published: 01 September 2025

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Headlines	Aug-25	Jul-25
Monthly Index*	539.7	540.1
Monthly Change*	-0.1%	0.5%
Annual Change	2.1%	2.4%
Average Price   (not seasonally adjusted)	£271,079	£272,664

* Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “August saw a slight softening in the rate of annual house price growth to 2.1%, from 2.4% in July. Prices dipped by 0.1% month on month, after taking account of seasonal effects.

“The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms. 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.

“Combined with the fact that mortgage costs are more than three times the levels prevailing in the wake of the pandemic, this means that the cost of servicing a mortgage is also a barrier for many. Indeed, an average earner buying the typical first-time buyer property with a 20% deposit faces a monthly mortgage payment equivalent to around 35% of their take-home pay, well above the long run average of 30%.

“However, affordability should continue to improve gradually if income growth continues to outpace house price growth as we expect. Borrowing costs are likely to moderate a little further if Bank Rate is lowered again in the coming quarters. This should support buyer demand, especially since household balance sheets are strong and labour market conditions are expected to remain solid.”

In their recent research report on the housing stock, Nationwide noted that typical property sizes have increased slightly over the last decade. Since 2013, the average floor area has increased from 95.3sqm to 96.2sqm.

The table (below) shows the increases across different property types. The largest increase has been in terraced houses, where the average floor area is 3.6% bigger than in 2013. But the average size of flat, the smallest property type, is now 1.7% smaller than 10 years ago at 60.3sqm.

Average floor area (m2)	2013	2023	% chg
Flats	61.4	60.3	-1.7%
Bungalow	77.0	77.5	0.6%
Terraced	88.7	91.9	3.6%
Semi-Detached	96.9	99.1	2.2%
Detached	152.9	151.9	-0.6%

Source: Nationwide analysis of MHCLG English Housing Survey

Gardner continued: “Reflecting the composition of the stock, the owner-occupier sector has the highest average floor area at 112sqm. The average floor area in the private and social rented sectors is smaller at 76m² and 65m² respectively, due to greater concentration of flats.

“Dwellings in England tend to be a little smaller on average compared with some of our European neighbours. The average dwelling size in the EU is 103m², although there is considerable variation amongst nations. The Netherlands, Norway and Belgium stand out as having the most spacious properties (on average), while typical properties tend to be much smaller in eastern European nations.”

 

Some 87% of owner-occupied properties in England have at least one spare bedroom. Remarkably, 53% are classified as being ‘underoccupied’, that is to say they have two or more spare bedrooms. The proportion of underoccupied properties has been trending up over time. By contrast, in the private rented sector, only 16% of properties are ‘underoccupied’.

Industry reaction:

Nathan Emerson, CEO at Propertymark:

“It is encouraging to see that house prices remain resilient at a time when the housing market has seen turbulence, very much influenced by the current economic backdrop.

“There are, however, many positive factors to reflect upon: we have witnessed a drop in the number of fall-throughs, a trend that demonstrates an uplift in the number of property transactions completed, and the number of overall listings reaching an all-time high.

“There are challenges ahead, however, such as increasing the supply of new sustainable homes, providing assistance to first-time buyers, and for lenders, ensuring that the latest drop in interest rates translates into more affordable mortgage products.”

Marc von Grundherr, director of Benham and Reeves:

“August’s marginal dip is no surprise, with the school holidays always proving disruptive for buyers and sellers. However, this is nothing more than a seasonal summer slump as our plans to move take a backseat in favour of holidays and longer days spent in the sun with family and friends.

“Now that September has arrived it brings with it a greater degree of normality where our day to day routines are concerned and so we should see momentum return quickly, with greater consistency in both market activity and house price growth.”

Verona Frankish, CEO of Yopa:

“The market may have paused over the summer, but the annual picture remains one of growth and resilience.

“With the holiday season behind us, attention now turns to the final run up to Christmas, which is traditionally one of the busiest periods of the year and one of the hard deadlines many buyers and sellers set for their completion data.

“The added motivation of moving before the festive season, combined with improving mortgage affordability, should help drive a strong finish to the year for the housing market.”

Tom Bill, head of UK residential research at Knight Frank:

“House prices have drifted lower since March as the market digests higher rates of stamp duty and supply continues to outstrip demand. Steady mortgage rates mean transaction numbers have improved over that time but the recent property tax speculation risks sending both sales and prices lower as buyers and sellers deal with pre-Budget uncertainty for the second year in a row.”

Jonathan Handford, managing Director at Fine & Country:

“A marginal 0.1% dip in house prices suggests the market is catching its breath rather than changing direction.

“While house price growth appears flat at a national level, it’s worth noting that there are significant regional disparities, with northern England and Scotland continuing to outpace southern areas.

“This relative steadiness owes much to improving affordability, as housing costs begin to align more closely with incomes. However, price growth remains tempered by rising levels of supply.

“The more-than-healthy stock levels reported by estate agents across much of the country are increasing competition among sellers, giving buyers a stronger hand when negotiating on price.

“Uncertainty around potential property tax changes in the autumn budget may also affect pricing and influence sellers’ willingness to be flexible.

“As we move into autumn, clarity on fiscal policy and mortgage conditions will be key to sustaining market momentum. While the property industry is highly adaptable, sweeping changes to taxation or policy risk unsettling activity in the short term.”

Jeremy Leaf, north London estate agent:

“We are not particularly surprised that prices have softened although agreed sales have held up well, supported by slowly improving affordability and recent reductions in base rate.

“However, with so much property still overhanging the market, many buyers are seizing the opportunity of negotiating hard whereas worried sellers often have no option but to agree revised terms in order for the transaction to proceed.

“Looking forward, we don’t see much change and certainly not much chance of a strong rebound in prices, given concerns about autumn tax rises, particularly for the property market.”

Amy Reynolds, head of sales at Antony Roberts: 

“The summer market was surprisingly resilient given the continued caution demonstrated by buyers. Well-priced property continues to sell, and the gap between serious buyers and committed sellers has narrowed.

“Stock levels remain constrained in some areas, keeping competition strong for the best homes.

“Looking ahead to autumn, we expect buyers to remain price-sensitive. The market feels more balanced than it did in the spring as those who are motivated press ahead but we don’t anticipate a surge in supply so the shortage of good stock will likely persist.”

Iain McKenzie, CEO of The Guild of Property Professionals: “While the Nationwide House Price Index indicates a slight softening in annual growth to 2.1% in August and a marginal 0.1% month-on-month dip, it’s crucial to look beyond these headline figures to the market’s underlying strength. We’ve witnessed a solid performance in 2025, buoyed by the Bank of England’s recent interest rate cuts, which are boosting sentiment and are set to further inject momentum into the property market.

“Transaction levels are a key and encouraging indicator. We’re observing a healthy recovery, with July 2025 showing a 4% increase year-on-year and a 1% rise from June. We are firmly on track to achieve 1.1 million transactions this year, a true testament to the market’s resilience. Furthermore, mortgage approvals in June were up 5.6% annually, aligning well with the five-year average and underscoring robust buyer confidence.

“Despite a more muted economic outlook and persistent price sensitivity, the housing market is proving its adaptability and capacity to stand firm. It’s not merely recovering; it’s recalibrating and establishing a new equilibrium, presenting opportunities for both buyers and sellers.

“We anticipate that house price growth will remain moderated for the remainder of the year. Increased housing stock levels are fostering greater competition among sellers and empowering buyers with more negotiating leverage. Therefore, correctly pricing a property from the outset will be paramount in this price-sensitive environment.”

Jonathan Hopper, CEO of Garrington Property Finders:

“The fleeting summer surge in prices is fading faster than most people’s tans.

“Nationwide’s data confirms that average property prices fell in August on both a monthly and a quarterly basis.

“Two factors are combining to hold prices down: a flood of supply which has made this a buyer’s market and a ‘back-to-school’ reality check among sellers. Lesson one is a crash course in economics – and the power of supply and demand.

“Deals are being done, but in many parts of the country there are many more sellers than serious buyers, and this is allowing buyers to take their time and negotiate hard on price.

“In response sellers are being forced to price their homes keenly just to get potential buyers through the door. And when it comes to agreeing a price, buyers often hold the strongest cards – even if buyers are behaving differently at different price points.

“While interest rate-sensitive purchasers such as first-time buyers remain very active, discretionary buyers higher up the property ladder are starting to adopt a ‘wait and see’ approach in response to reports of potential tax reforms in the Autumn Budget.

“The August cut in the base rate has yet to introduce any extra zip to the market, and we’re likely to see property prices drag over the next few months.

“In the absence of confidence and clarity, buyers’ offers will reflect the unknown risks in what they are willing to pay. Deals will be done, but only pragmatic sellers are likely to be successful in what is set to remain a very price sensitive autumn market.”

Karen Noye, mortgage specialist at Quilter: 

“Today’s Nationwide House Price Index shows house prices fell by 0.1% in August compared to a 0.5% increase in July, while annual growth lowered to 2.1% from 2.4% in July. While the housing market has remained fairly resilient during the usual summer lull, affordability pressures are still weighing heavily.

“Last week’s property transaction figures pointed to relatively steady buyer demand, with July seeing 95,580 residential transactions – a 4% increase compared to the same month last year. However, the most recent inflation print has complicated the outlook for interest rates. Mortgage rates have been easing slightly but typical fixed deals remain around 4%, keeping monthly payments elevated, and higher inflation will make the path to lower interest rates even longer.

“Speculation around potential reforms in the chancellor’s upcoming budget, including possible levies on high-value homes or changes to capital gains tax on primary residences, could also cause hesitation among sellers. This would tighten supply further and paradoxically push prices higher, worsening conditions for new entrants to the market.

“While the economic backdrop remains challenging, today’s figures suggest the housing market is still managing to hold reasonably firm for now. Sustained momentum will depend on future interest rate decisions and whether upcoming policy decisions support or hinder market activity. Either way, without a significant increase in available homes and clearer policy direction, the market risks stagnation.”

Ryan Etchells, chief commercial officer at Together:

“Another fall in house prices may ring alarm bells, however there are still opportunities out there.

“This prolonged period of subdued activity can be attributed to various factors. Primarily, a difficult economy is stopping potential buyers from following through on their property plans. This is compounded by relatively high interest rates.

“While the Bank of England’s latest base rate cut may prompt mortgage lenders to drop their rates, swap rates, which impact fixed-term borrowing, remain volatile. Stubborn inflation and a weak jobs market will also subdue the housing market as potential buyers feel the pressure on their purse strings. To compound these issues, rumoured tax changes, including a potential property tax on houses worth over £500,000 – which could be announced in the autumn budget – may also put pressure on the market due to unknown secondary impacts creating uncertainty.”

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners:

“UK house prices fell 0.1% in August, while annual growth softened to 2.1% from 2.4% in July, suggesting the market is struggling to find its feet following the hike in stamp duty costs that came into force in April when thresholds reverted to their previous, lower levels.

“While the summer has seen in a surge in homebuying activity, sellers are pricing more realistically in a bid to secure deals at a time when buyers hold the upper hand. Sellers, who initially listed at inflated prices, are increasingly adjusting their asking prices to stay competitive.

“Meanwhile, speculation is mounting over further property tax reforms, just months after the market was forced to absorb the end of the stamp duty break. Chancellor Rachel Reeves is expected to deliver fresh tax hikes at her upcoming fiscal statement amid concerns over the health of the public finances, with property taxation believed to be a target.

“Proposals reportedly under consideration include a new levy to replace stamp duty on the sale of homes worth more than £500,000, while owners of high value homes may be hit with capital gains tax bills even if the property is their primary residence. An overhaul of the council tax system is also being mulled, while buy-to-let landlords are also in the spotlight with reports suggesting National Insurance could be applied to rental income

“Such changes could unsettle buyers, homeowners and buy-to-let landlords alike. The idea of charging CGT on the sales of a primary residence challenges the long-held belief that owning the home you live in keeps the taxman at bay. Combined with a levy on high-value home sales, these proposals risk grinding the market to a halt, as homeowners reconsider the cost of moving.

“For landlords, the prospect of further tax changes could erode the appeal of buy-to-let investing once and for all. Many are already grappling with tighter regulations and a higher tax burden, so another tax raid could prompt more landlords to sell up, potentially driving up rents as supply shrinks.

“Looking ahead, uncertainty around future tax policy combined with a growing stock of homes on the market may continue to temper price growth, potentially improving affordability across the market. Affordability has improved since the Bank of England began cutting rates in August last year, though stubborn inflation continues to cloud the outlook for further cuts.”

“With house price growth subdued and listings on the rise, particularly from second homeowners and landlords looking to exit, buyers may find lucrative opportunities in the months ahead, especially if sellers continue to price competitively,” Haine added.