August saw the fastest fall in house prices for 14 years, with the average property now worth almost £15,000 less than 12 months ago.

According to Nationwide’s latest housing price index (HPI), published today, prices fell 0.8% month on month in August and are now 5.3% below August their 2022 peak.

The building society says this represents annual fall of £14,600 on a typical home.

In the first half of 2023, the number of completed housing transactions was nearly 20% below pre-pandemic levels and 40% lower than in the first half of 2021.

Meanwhile, home mover completions (with a mortgage) in the first half of 2023 were 33% lower than 2019 levels, whilst first-time buyer numbers were 25% lower.

Buy-to-let purchases involving a mortgage were nearly 30% below pre-pandemic levels. By contrast, cash purchases were up 2%.

Nationwide’s chief economist Robert Gardner says: “August saw a further softening in the annual rate of house price growth to -5.3%, from -3.8% in July, the weakest rate since July 2009.

“The softening is not surprising, given the extent of the rise in borrowing costs in recent months, which has resulted in activity in the housing market running well below pre-pandemic levels.

“Mortgage approvals have been around 20% below the 2019 average in recent months and mortgage application data suggests the weakness has been maintained more recently.

“Nevertheless, a relatively soft landing is still achievable, providing broader economic conditions evolve in line with our (and most other forecasters’) expectations.”

He adds that while activity is likely to remain subdued in the near term, healthy rates of nominal income growth and modestly lower house prices should help to improve affordability over time.

GreenResi chief executive Anna Clare Harper says: “The softening from peak pricing levels is not surprising, as higher interest rates make buying and owning property less affordable regardless of house prices.

“Up to two million property owners are facing double or triple their previous housing costs by the end of this year as their variable-rates rise or fixed-rate terms come to an end. Some will need to sell at any price.”

MT Finance director Tomer Aboody says: “The declining number of transactions, combined with negativity in the market, is resulting in a softening of property prices, a trend which has been evident for several months.

“Constant interest rate rises are making affordability difficult for buyers who are trying to move, with many having little option but to wait until rates settle.”

National estate agent group Fine & Country’s managing director Nicky Stevenson says: “Mortgage rates are squeezing buyer affordability, leading to lower asking prices and offers, and softening average house price growth.

She adds: “As we come out of the summer, demand is expected to build again, and many sellers are looking to begin marketing their home in September.

“A steady pipeline of sales, coupled with falling inflation and a strong labour market, should help the property market enjoy a soft landing over the coming months.”

Garrington Property Finders chief executive Jonathan Hopper says: “Hopes that this would be a brief or even gentle reset are fading faster than people’s summer tan lines.

“Instead, much of the property market is going through an increasingly sharp correction, with sellers enduring the fastest fall in average prices since July 2009.

“Meanwhile many would-be buyers are still being prevented from capitalising on the falling prices by the high cost of mortgages – which means that areas they might previously have chosen to buy in have become less affordable even as prices come down.

“The net effect has been a dramatic slowdown in the number of homes being bought and sold.”

He adds: “While all buyers are wary of paying a price today that could be lower tomorrow as the market settles further, this is unquestionably a buyer’s market – and sellers are increasingly willing to accept below asking price offers from committed, proceedable buyers.”

The Guild of Property Professionals chief executive Iain McKenzie says: “All eyes will be on the next few months.

“Demand usually remains high in the autumn, as potential buyers look to get moved in before the festive season.

“With sales figures still buoyant, it is unlikely that we will see any sharp falls for the rest of the year.”