UK house price growth softened to 2.1% in August, following an annual increase of 2.4% in July, Nationwide has revealed.

The building society’s latest house price index showed that the average house price stood at £271,079 in August, which was a month-on-month decline of 0.1%.

In the three months to August, house prices dropped by 0.4%, continuing the trend of property prices falling quarter-on-quarter.

Chief economist at Nationwide, Robert Gardner, said the subdued pace of house price growth was understandable, given that affordability remains stretched relative to long-term norms.

He added: "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.

“However, affordability should continue to improve gradually if income growth continues to outpace house price growth as we expect.”

Chief commercial officer at Together, Ryan Etchells, stated that while another drop in house prices may be a warning, he said there are "still opportunities out there".

Etchells concluded: "While the Bank of England’s latest base rate cut may prompt mortgage lenders to drop their rates, swap rates, which impact fixed-term borrowing, remain volatile. Stubborn inflation and a weak jobs market will also subdue the housing market as potential buyers feel the pressure on their purse strings. To compound these issues, rumoured tax changes, including a potential property tax on houses worth over £500,000 - which could be announced in the autumn budget - may also put pressure on the market due to unknown secondary impacts creating uncertainty.

"Despite these headwinds, it’s clear that there remain many opportunities for aspiring homebuyers and landlords looking to invest, and those keen to seize an opportunity and move forward with their property plans can consider the wide range of financial products available, like shared ownership mortgages, specialist buy-to-let mortgages or bridging loans for fast, flexible finance."

---