House prices increased by 0.3% in August, marking a third consecutive monthly rise, according to the latest Halifax house price index.
The annual rate of growth eased slightly to 2.2%, down from 2.5% in July.
Despite this, the average property price is now £299,331, edging up to a new record high.
However, the average price paid by first-time buyers has fallen slightly as affordability improves. The typical first-time buyer property now costs £237,577, down by 0.6% since May. On a 95% LTV mortgage over 30 years, that could mean monthly repayments of around £1,179 compared to the average UK private rent of £1,343.
Northern Ireland continues to lead the UK for annual house price growth, with average property values up 8.1% over the past year, although down from the 9.3% growth recorded last month.
Scotland saw the next strongest annual increase with prices rising 4.9% in August to an average of £215,594.
In Wales, property values rose 1.6% year-on-year, though the pace of growth has eased in recent months.
Across England, there remains a clear North/South divide. The North East, North West, and Yorkshire & the Humber all recorded annual growth above 4%, making them the fastest-rising regions.
By contrast, the South West saw prices fall 0.8% over the past year, the first UK nation or region to record an annual decline since Eastern England in July 2024.
London continues to see modest growth, with prices up 0.8% year-on-year. It remains the most expensive part of the UK, with an average property value of £541,615.
Amanda Bryden, head of mortgages at Halifax, said: “The story of the housing market in 2025 has been one of stability. Since January, prices have risen by less than £600, underlining how steady the market has been despite wider economic pressures.
“Affordability remains a challenge, but there are signs of improvement. Interest rates have been on a gradual downward path for nearly two years, and many of the most competitive fixed-rate mortgage deals now offer rates below 4%.
“Combined with strong wage growth – which has outpaced house price inflation for nearly three years – this is giving more prospective buyers the confidence to take the next step. Summer is typically a quieter period for the market, so the recent rise in mortgage approvals to a six-month high is an encouraging sign of underlying demand.
“While the wider economic picture remains uncertain, the housing market has shown over recent years that it can take these challenges in its stride. Supported by improving affordability and resilient demand, we expect to see a slow but steady climb in property prices through the rest of this year.”
Tom Bill, head of UK residential research at Knight Frank, commented: “Stable mortgage rates have helped the housing market get back on its feet after the April stamp duty cliff edge but high levels of supply mean annual price growth has drifted lower. Although there is a risk that some buyers and sellers hesitate ahead of the Budget, which would increase downwards pressure on prices, others may be keen to accelerate their plans, which would have the opposite effect. It will depend on whether people are more focussed on possible changes to stamp duty or capital gains tax. The former feels too difficult to attempt and the latter feels politically toxic.”
Jonathan Hopper, CEO of Garrington Property Finders, added: “The laws of supply and demand are applying a strong gravitational pull on property prices. Price inflation has barely got off the ground in 2025, and Halifax's data shows that since January the average UK home has risen in value by less than £600.
“In some parts of the country the number of sellers far outstrips the number of serious buyers. In these areas, sellers are having to price their homes keenly just to grab buyers’ attention, and many are offering discounts or sweetening the price in other ways - perhaps by making a contribution to the buyer’s stamp duty costs - to get a deal done.
“Average prices fell by 0.8% in South West England over the past 12 months, as large numbers of second homes and holiday let properties were put up for sale by their disenchanted owners. Prices have been creeping up in London and the commuter belt, but by tiny amounts.
“Northern Ireland and Scotland are still seeing prices rise at a decent clip, but overall the market is settling into a period of modest price growth. The annual rate of price inflation is half what it was a year ago.
“Despite the strength of their negotiating position, many buyers remain cautious - though we are seeing different behaviour at different price points.
“First-time buyers are having the best time of it. Halifax’s data shows the price of an average first home has fallen by 0.6% since May, and first-time buyers have also benefitted most from falling interest rates as they typically have the biggest mortgage relative to the purchase price.
“Higher up the property ladder, where purchases are more likely to be discretionary, many buyers are adopting a ‘wait and see’ approach as rumours swirl about major tax changes coming in the Autumn Budget.
“Against that uncertain backdrop, buyers’ offers tend to reflect these unknown risks. Deals are still being done, but only pragmatic sellers are likely to succeed in what is set to be a very price-sensitive autumn market. On the price front, autumn will be about balance, not boom or bust."
