House price growth slowed in August, with annual inflation easing to 0.9% from a revised 1.2% in July, according to the latest UK house price index (HPI).

The average property price reached £273,000, while monthly prices increased by 0.3%, the latest Government figures showed.

The number of residential property transactions worth at least £40,000 fell by 1.9% year on year to an estimated 95,000 in August, while transactions declined by 1.5% compared with July on a seasonally adjusted basis.

The figures indicate a cooling market as affordability pressures, rising inflation and uncertainty over interest rates dampen buyer confidence.

In England, average house prices rose by 1.1% over the year to £293,000. The North East recorded the strongest annual growth, at 3.2%, despite a 0.6% monthly decline. London remained the weakest-performing region, with annual prices falling by 2.2% to an average of £554,000, although values rose by 0.7% over the month.

Chris Storey, chief commercial officer at Atom bank, said: “This house price rise is surprising, and it’s difficult to see where the impetus for sustained house price growth will be in the months ahead, given the pressures on household budgets and the impact higher interest rates are having on buyer confidence. That pressure is being exacerbated by rising inflation, which has grown faster than expected to 3.5%.”

Storey also called for the Budget to address the shortage of homes, arguing that targeted support for first-time buyers (FTBs) would not be enough without measures to increase housing supply.

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