Annual house price growth in the UK slowed in August, according to new figures from Nationwide, as speculation mounts that the government could overhaul property taxes in the forthcoming Autumn Budget.
The building society reported that house prices grew by 2.1% in the year to August, down from 2.4% in July. The slowdown matches the weakest annual growth rate recorded this year, first seen in June, and marks the lowest pace since July 2024. Month-on-month prices edged down by 0.1%.
Nationwide’s data shows the average UK home now costs £271,079, based on its mortgage lending activity. Cash buyers, who make up about a third of all housing transactions, are not included in the figures.
Robert Gardner, chief economist at Nationwide, said the data underlined persistent affordability challenges for prospective buyers. “House prices are still high compared to household incomes, making raising a deposit challenging, especially given the intense cost of living pressures in recent years,” he told the BBC.
Mortgage costs remain a major barrier to home ownership. Nationwide noted that average monthly payments are now three times higher than in the years immediately after the pandemic. According to financial data provider Moneyfacts, the average interest rate on a two-year fixed mortgage stood at 4.96% in August, with five-year deals averaging 5%.
Despite this, Gardner said there were reasons for cautious optimism, pointing to the Bank of England’s recent interest rate cut and expectations that incomes could begin to grow faster than house prices.
The housing market backdrop comes as ministers debate sweeping reforms to the property tax system. Proposals reportedly under consideration include scrapping stamp duty, introducing a new national property tax to replace council tax, a National Insurance levy on landlords, and removing capital gains tax relief on more expensive homes.
Supporters of reform argue that removing stamp duty could boost market activity and help people move more easily. However, critics warn that the measure could leave a hole worth billions in government revenues at a time when Chancellor Rachel Reeves is under pressure to raise funds to close a sizeable fiscal gap.
Industry reaction to the Nationwide data has been mixed. One estate agent described the market as “catching its breath, rather than changing direction.” Karen Noye, mortgage expert at wealth manager Quilter, said the figures showed resilience but warned that momentum depended on interest rate policy and future government decisions.
