UK house prices inch higher in August, activity stays subdued

• UK house prices increased 0.2% month-on-month in August, beating the 0.1% forecast.
• July's monthly change was revised from a 0.1% gain to a 0.1% decline.
• Annual house price growth slowed to 1.6% in August, below the 2.0% expected.
• The prior annual figure was revised down to 1.4% from 1.8%.

House prices saw a modest rise in August, but the overall picture remains one of stability following a downward revision to July's data. The housing market continues to show subdued activity. Economic uncertainty, linked to ongoing US-Iran tensions, is spilling over into inflation and interest rates.

Despite the monthly increase, the average UK property price dipped slightly to £275,465. The positive annual change underscores that the resilience seen earlier in the year is still holding up reasonably well.

Nationwide notes that:

"Market activity and house prices have remained subdued in recent months, in part reflecting the uncertain economic backdrop. Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices and market interest rates.

Underlying affordability is improving, as house price growth remains well below earnings growth. although some of these gains have been offset by higher mortgage rates. Nevertheless, this suggests that activity should regain momentum in the quarters ahead providing the energy shock wanes and confidence returns, especially if market interest rates fall back towards pre-conflict levels."