UK House Prices Rise Slightly Amid Energy Cost Pressures

Average UK house prices rose 0.2% in August to £275,465, according to data from Nationwide Building Society. This growth reverses a 0.1% decline in July and slightly exceeds economist expectations, suggesting resilience in the housing market despite economic pressures.

The market faces significant headwinds, including an energy shock caused by conflict between the United States and Iran, which has stalled hopes for interest-rate cuts. Additionally, the energy regulator Ofgem announced a 4% increase in the price cap for gas and electricity bills effective October. Demand has been partially sustained by healthy savings and cost-of-living measures implemented by Prime Minister Andy Burnham.

Conflicting data from Rightmove indicates that asking prices fell 2% in August, marking the largest monthly drop since 2022, with particular weakness noted in London. Chief Economist Robert Gardner noted that underlying affordability is improving as house price growth remains below earnings growth, though he indicated that momentum depends on the waning of energy shocks and a return of confidence.