House prices failed to grow month-on-month in September, as prices fell by 5.3% on an annual basis, Nationwide’s house price index (HPI) has found.

The year-on-year figure remained the same compared to August, with the average house price in the UK currently standing at £257,808.

Nationwide’s chief economist, Robert Gardner, said: “Annual house price growth was unchanged at -5.3% in September. Prices were also flat over the month, after taking account of seasonal effects, following the -0.8% decline seen in August.

“Housing market activity remains weak, with just 45,400 mortgages approved for house purchase in August, c.30% below the monthly average prevailing in 2019 before the pandemic struck. This relatively subdued picture is not surprising given the more challenging picture for housing affordability. For example, someone earning an average income and purchasing the typical first-time buyer home with a 20% deposit would spend 38% of their take home pay on their monthly mortgage payment – well above the long-run average of 29%.”

All regions in the UK have seen a drop in annual house prices in the last quarter, with the South West recording a 6.3% fall year-on-year.

East Anglia and the East Midlands have recorded annual declines of 5.6% and 5.5% respectively, with Wales, the outer South East and Yorkshire and the Humber all recording reductions of 5.4% in house prices in the last quarter.

Despite being the only region to record an increase in annual house prices in the last quarter, Northern Ireland saw the smallest drop in annual house prices, dropping by 1.8%. The average house price in the country currently sits at £180,668.

Personal finance analyst at Bestinvest, Alice Haine, added: “While weakening property prices are good news for first-time buyers looking to bag a bargain and bad news for sellers wanting the highest price possible, high mortgage rates remain a major stumbling block for the housing market. Enquiries may be up, as buyers return buoyed by improving mortgage rates and higher stock levels, but turning interest into concrete deals is a challenge when people cannot match aspirations with buying power.

“Mortgage approvals – a forward-looking indicator – dropped 8% in September compared to August, according to recent Bank of England data, with lending likely to remain weak in the final quarter of 2023 as cost of living pressures and high borrowing costs persist.

“While mortgage rates have softened from their July peak, easing the affordability crunch for some, first-time buyers and those refinancing must now navigate a very different market to two years ago when borrowing costs were at rock bottom and house prices were rising at a rapid pace.”

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