UK House Prices See Sharpest August Decline Since 2018

Average asking prices for homes in Great Britain fell by 2% in August to £364,999, marking the steepest August decline in eight years. Rightmove reported that prices are down 1% year-on-year, the sharpest annual drop since December 2023. The portal subsequently downgraded its 2026 national house price growth forecast from a 2% increase to a range between 0% and -2%.

A significant regional divide has emerged. While the North West saw a 1.9% annual increase, London prices fell by 3.1% annually. In the Royal Borough of Kensington and Chelsea, average asking prices plummeted by over £95,000 in a single month. London's available home inventory has reached a 16-year high, leaving affordability-stretched buyers with the widest choice of homes in over a decade.

Market volatility is driven by mortgage rates rising to 5.09% and geopolitical instability linked to the Iran war. Buyer anxiety is further heightened by the upcoming October Budget and a proposed mansion tax surcharge on homes worth over £2 million. While the July 20 appointment of Prime Minister Andy Burnham triggered a 5% increase in buyer demand, overall activity remains 10% below last year's levels.

Buy-to-let investors are leveraging the sluggish market to secure steep discounts. In July, investors accounted for 14.1% of all purchases, with over half of their offers at least 10% below asking price. Sellers of leasehold flats have been particularly vulnerable, accepting 41% of these heavily discounted offers.