UK House Prices Dip in August 2025 — Yet Market Momentum Holds Strong

2025-08-22

Seasonal Softening in Asking Prices

August 2025 saw the average UK asking price fall by 1.3% (£4,969) to £368,740, according to Rightmove’s latest House Price Index. While this mirrors typical summer cooling, annual growth remains marginally positive at +0.3%, signalling that the market retains its fundamentals. Sellers appear to be adjusting to heightened competition and seasonal nuances.

Why Sellers Are Adjusting Their Asking Prices

High inventory levels: Available properties are up 10% year-on-year, pressure that prompts sellers toward more realistic pricing.
Seasonal trends: August traditionally sees reduced market activity as buyers and sellers take holiday pauses.
Pricing psychology: Properties priced accurately from the outset sell much faster—averaging 32 days, compared with nearly 100 days after price reductions.

London Leads the Downturn

Inner London is seeing the steepest price corrections. Affordability concerns, coupled with high stock levels, have tempered asking prices more significantly in the capital than in growing suburban or regional areas.

Mortgage Rates Offer Relief — Cautious Optimism Prevails

Thanks to recent Bank of England rate cuts, current two-year fixed mortgage rates hover around 4.5%, down from approximately 5.3% a year ago. Although this improves affordability, further cuts remain uncertain, keeping buyer sentiment cautious yet hopeful.

Sales Momentum Defies Seasonal Expectations

July 2025 delivered the highest number of sales agreed since 2020, up 5–8% year-over-year—highlighting that demand remains robust when backed by fair pricing and prime locations.

Broader Market Data Confirms Resilience

Other indices reinforce this tempered but steady growth:

Nationwide House Price Index shows a +2.4% annual increase, the fastest pace since late 2022, despite a mild monthly decline.
Land Registry data for May reports average UK house prices at £268,652, marking a +3.9% year-on-year rise.

Revised Forecasts for 2025

Many forecasters have moderated their outlooks:

Rightmove now expects average asking price growth of +2% for 2025, down from its earlier +4% forecast.
Zoopla projects around +2.5%, citing affordability and higher stamp duty as dampening factors.
RICS anticipates 3–4% growth, acknowledging cautious buyer sentiment.
Savills takes a longer-term view, predicting total growth of 23.4% by 2029, with 2025 marking a shift to steadier momentum.

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