Slowing in annual house price growth 

The drop is the first time since October last year that house prices had slowed to single digits. However, according to Nationwide’s chief economist Robert Gardner, the pace of increase remained “robust”.

He added: “Prices were unchanged over the month to August, after taking account of seasonal effects. This is the first month not to record a sequential rise since July 2021.

“There have been further signs of a slowdown in the market over the past month, with the number of mortgages approved for house purchase remaining below pre-pandemic levels and surveyors reporting a decline in new buyer enquiries.  

“Nevertheless, the slowdown to date has been modest and, combined with a shortage of stock on the market, this has meant that price growth has remained firm. 

“By lowering transaction costs, the reduction in stamp duty may provide some support to activity and prices, as will the strength of the labour market, assuming it persists, with the unemployment rate at its lowest level since the early 1970s.

“However, headwinds are growing stronger suggesting the market will slow further in the months ahead. High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows.” 

Gardner also said that housing affordability has become more stretched with deposit requirements remaining a major barrier. Additionally, the increase in prices in recent years - together with a rise in mortgage rates since the start of the year - have pushed the typical mortgage payment as a share of take-home pay well above the long-run average. 

Broken down by region, Nationwide’s HPI indicates a softening in annual house price growth in 10 of the UK’s 13 regions in the third quarter of this year. The south west continued to be the strongest performing region, although this has seen a slowing in annual house price growth - going from 14.7% in the second quarter of 2022 to 12.5% 

In contrast, London remained the weakest performing UK region - although it did see a modest pickup in annual prices to 6.7% - up 0.7% when compared to the six percent figure seen in the second quarter of 2022. 

Wales, meanwhile, remained the top performing nation - although the country still saw annual price growth slow to 12.1%. Northern Ireland’s growth softened to 10.1%, while Scotland saw a further slowdown in annual growth going from 9.5% in the second quarter of 2022 to 7.8%. 

In England, there was also a further slowing in annual house price growth going from 10.7% to 9.9%.