Annual house price growth in the UK slowed to 0.2% in the year to August, the latest UK House Price Index from the Office for National Statistics (ONS) has shown.

This was down from a revised estimate by the ONS of 0.7% in the 12 months preceding July.

Latest price movement means the average UK house price stood at an estimated £291,000 in August, a level little changed from a year earlier. However, this was around £9,000 above the recent low point recorded in March earlier this year.

Across the UK, average house prices over the 12 months to August remained little changed in England to £310,000 (0.0%), while they decreased in Wales to £217,000 (-0.1%) and increased in Scotland to £194,000 (1.1%). Average house prices climbed by 2.7% to £174,000 in the year to Q2 in Northern Ireland.

The latest ONS data also showed that the North East saw the highest annual percentage change of all English regions in the year to August (3.6%), while the East of England saw the lowest (-1.6%).

Head of mortgages at Atom bank, Richard Harrison, commented: “Prices continue to rise more slowly, with today’s data reflecting the challenging time the property market has experienced so far in 2023, with rising rates negatively impacting how much buyers are able to borrow as well as customer confidence.

“As a result, activity in the market has remained subdued and the latest Bank of England (BoE) approval figures point to a marked reduction in purchase activity, with August’s numbers some 37% lower than the same period last year. This is particularly true in the South of England, which has seen house prices fall as people face ongoing affordability challenges.

“However, there is some cause for cautious optimism. Softening prices present an opportunity for first-time buyers, and many experts now think that base rate has reached its peak, with headline mortgage pricing falling over the last 12 weeks. This is unlikely to stimulate an immediate dramatic bounce in activity and prices, but it does reduce the potential of a more pronounced reduction in prices as had previously been speculated by some commentators.”

CEO at fintech broker Loan.co.uk, Paul McGerrigan, added: “Despite the cost of living crisis and rising interest rates pushing hard against growth, prices remain stubbornly strong. The underlying fact that demand continues to significantly outstrip supply remains the backdrop.

“However, today's inflation figures may prompt the BoE to raise rates in two weeks, which would further impact affordability and hugely impact sentiment. I urge caution to prevent longer term economic recession and market harm.”

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