The latest Nationwide survey shows that annual house price growth eased in August as affordability pressures continue to weigh on buyers.

House prices rose 2.1% year-on-year, down from 2.4% growth in July. On a monthly basis, prices slipped 0.1% following a 0.5% rise in July. The average UK house price now stands at £271,079, compared with £272,664 in July.

Nationwide’s Chief Economist, Robert Gardner, noted that stretched affordability remains a key factor:  “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.”

Gardner highlighted that an average earner purchasing a typical first-time buyer property with a 20% deposit now faces monthly mortgage payments equivalent to around 35% of take-home pay—well above the long-run average of 30%.

Looking ahead, he struck a cautiously optimistic tone, suggesting affordability may gradually improve if income growth continues to outpace house price growth, while further cuts to the Bank Rate could help reduce borrowing costs. Stable household finances and resilient labour market conditions are also expected to support demand.