"Given the rapid gains seen over the past 12 months, August’s rise was relatively modest and the annual rate of house price inflation continued to slow, hitting a five-month low of 7.1%"
However, annual house price inflation slowed further to 7.1%, down from 7.6% in July.
The data shows that annual house price inflation is now slowing in most nations and regions.
Wales remains the strongest performing area, with annual house price inflation at 11.6% and the only double-digit rise recorded in the UK during August. The South West is also still experiencing strong growth at 9.6%, likely reflecting the ongoing demand for rural living within the region.
Some areas do appear to have headroom for even stronger price growth, with annual house price inflation in the North East now up to 8%. Northern Ireland has also seen prices rise further with annual house price inflation of 9.3% in August, though Scotland has seen price growth slow to 8.4%.
Greater London continues to lag the rest of the country, registering just a 1.3% annual increase in prices in August and, over the latest rolling three-monthly period, was the only region or nation to record a fall in prices (-0.3%).
Russell Galley, managing director of Halifax, said: “Given the rapid gains seen over the past 12 months, August’s rise was relatively modest and the annual rate of house price inflation continued to slow, hitting a five-month low of 7.1% (versus 7.6% in July). However, compared to June 2020, when the housing market began to reopen from the first lockdown, prices remain more than £23,600 higher (or +9.9%).
“Much of the impact from the stamp duty holiday has now left the market, as highlighted by the drop in industry transaction numbers compared to a year ago. However, while such Government schemes have provided vital stimulus, there have also been other significant drivers of house price inflation.
“We believe structural factors have driven record levels of buyer activity – such as the demand for more space amid greater home working. These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.
“Moreover, the macroeconomic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels. Coupled with a supply of properties for sale that looks increasingly tight, and barring any reimposition of lockdown measures or a significant increase in unemployment as job support schemes are unwound later this year, these factors should continue to support prices in the near-term.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: "While property prices are still rising, the slightly more modest rate of growth reflects reduced intensity in the market compared with earlier in the summer. Then, buyers were desperate to take advantage of the full stamp duty holiday; now there are still moderate savings to be made but there is nothing like the same urgency.
"Nevertheless, demand from buyers continues to outstrip the supply of property coming to the market for sale. Combined with the availability of cheap mortgages and lender criteria creeping back towards pre-pandemic status, this creates the perfect storm for strong house price growth to continue for the remainder of the year."
Jonathan Hopper, CEO of Garrington Property Finders, added: “After months of frenetic activity and rapidly accelerating prices, the property market has flicked on the cruise control.
“Price growth across the UK is still strong, but there are a few areas – notably London – where the pace has gradually eased off. Average prices in the capital are a mere 1.3% above what they were at this time last year.
“Even with the amplifying effect of the stamp duty holiday now gone, buyer demand remains strong. The reopening of offices and the ‘return of the commute’ have done little to cool many citydwellers’ desire to relocate to the coast or countryside.
“Yet buyer behaviour is becoming more measured, and more targeted. Astute buyers are now asking much tougher questions on price. After many months of having things almost entirely their own way as prices rose from one week to the next, sellers are steadily being forced into a reality check.
“With mortgages cheaper than they have ever been and the economy bouncing back strongly, buyer demand is likely to remain solid. But with buyers now more choosy and less hurried as the stamp duty holiday formally ends, many sellers are having to rein in their price aspirations.
“Price growth is set to continue, but not at the breakneck pace of the first half of the year.”
