UK house price growth remains subdued as buyers take caution: Nationwide HPI

Buyers may be delaying their property purchase until costs come down, but could they be caught out by rising mortgage rates?

Activity in the UK housing market remained subdued in August which resulted in average property prices rising by just 1.6% year-on-year, latest data from one of the country’s biggest mortgage lenders, Nationwide BS, has found.

Despite a slight improvement compared with July (1.4%), annual property price growth was still notably slower than the same month in previous years (e.g. 2.1% and 2.4% in August 2025 and 2024, respectively).

And, while house prices made a small recovery after dropping by 0.1% between June and July, only a meagre increase of 0.2% was recorded in the month to August, Nationwide BS further revealed.

UK Housing Market Trends: Graph showing annual percentage change in UK house prices over the past 25 years.

The “uncertain economic backdrop” is partially to blame for persistent, sluggish growth in property prices, according to Robert Gardner, Chief Economist at Nationwide BS. “Geopolitical tensions remain high, with conflict in the Middle East exerting upward pressure on energy prices and market interest rates,” he explained.

In turn, mortgage lenders have acted swiftly to reprice their products in response to changing economic forecasts, which has pushed average fixed rates well above 5% over recent months.

“Higher mortgage rates stretch the household budgets of prospective homebuyers, which can stall their plans,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

With the Royal Institution of Chartered Surveyors (RICS) reporting that new buyer enquiries remained weak in July, Springall suggested that “buyers could be feeling cautious of making a major financial commitment or delaying their plans until mortgage costs ease” which is stifling demand for properties.

Average property price hits six-month low

But, while existing homeowners may be dismayed to learn the typical price of a UK home hit a six-month low of £275,465 in August (not seasonally adjusted), this could offer an opportunity to would-be buyers struggling to get a foot on the property ladder.

UK Housing Market Trends: Graph showing average house prices over the past 20 years.

“Those who can afford to secure a mortgage may find they have some bargaining power on their side while the market remains subdued,” said Springall.

However, she added that “lenders also have an important role to play in supporting affordability, with products such as Nationwide’s Helping Hand mortgage giving eligible first-time buyers more borrowing power based on their income”.

Are mortgage rates set to rise?

While Gardner said underlying affordability is improving (as earnings growth outpaces house price growth), he recognised that “some of these gains have been offset by higher mortgage rates”.

Unfortunately, mortgage rates could soon be set to climb even higher as swap rates have risen to 30-day highs following an escalation in conflict between the US and Iran. The renewed tensions are once again threatening the route of global oil supplies through the Strait of Hormuz which could lead to more expensive energy bills and stoke inflation.

“This does not bode well for borrowers, as lenders use swap rates as a key influence to reprice their fixed rate mortgages,” Springall explained. “Those borrowers who were hoping for cheaper mortgage rates will be frustrated if lenders start hiking rates over the coming weeks, so it is essential borrowers seek advice and secure a new deal quickly,” she continued.

Reassuringly, some mortgage brokers, such as our preferred broker Mortgage Advice Bureau, regularly monitor the market and will look to move their clients onto better deals if one becomes available before completion.

Speak to an award-winning mortgage broker today

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.