Annual house price growth decelerated to 10.0% in August, slowing from 11.0% in July, the latest Nationwide House Price Index has indicated.

According to Nationwide’s data, this was still the tenth consecutive month that house price growth has remained in double digits.

UK house prices also saw a 0.8% month-on-month climb during August, up from 0.2% growth in July, to mark the thirteenth successive monthly increase.

This has taken the average UK house price to £273,751 as of the end of August, a figure up from £271,209 at the end of July, and around £50,000 higher than it was two years ago.

Nationwide chief economist, Robert Gardner, commented: “There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer enquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels. However, the slowdown to date has been modest, and combined with a shortage of stock on the market, has meant that price growth has remained firm.

“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with inflation set remain in double digits into next year. Moreover, the Bank of England is widely expected to continue raising interest rates, which will also exert a cooling impact on the market if this feeds through to mortgage rates, which have already increased noticeably in recent months.”

Nationwide’s Gardner also highlighted the recently announced energy price cap increase, highlighting that it will be the homeowners with the least energy efficient properties that will feel the greatest impact.

Ofgem recently announced an 80% increase in the energy price cap, effective from 1 October, which will see a typical household energy bill jump to £3,545 a year, with costs in some cases even higher.

The Nationwide index looked at the impact of rising energy costs on average bills for properties with different energy efficiency ratings – as reported on energy performance certificates.

“Currently, based on the April 2022 price cap, the most energy efficient properties – those rated A to C – pay £1,700 per year, whilst the least efficient, those rated F to G, typically see bills over twice as high as £3,900 per annum,” Gardner said.

“As things stand, from October, average bills for D-rated properties, the most common type, are set to rise by just over £1,250 a year, even after taking account of the government’s £400 discount. Those in properties rated A to C will see average bills increase by nearly £1,000 a year, or over £80 per month. E-rated properties will see an increase of over £1,700 per year (£150 per month), whilst those in the least energy efficient properties, F and G, face a staggering £2,700 rise (£225 per month).

“While only a small proportion of the stock is rated F or G, approximately 2% of those with mortgages, the challenges for these households appear particularly acute.”

Gardner added: “With household budgets coming under substantial pressure, the government is likely to increase support. But, as well as addressing the rising cost of energy bills, improving the energy efficiency of the housing stock could play a crucial role.

“Incentivising improvement measures, such as loft and cavity wall insulation and solar PV installations, could help limit bill increases and assist the UK towards its carbon emissions targets.”

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