House prices fell slightly in August by 0.2%, following a 0.1% decrease in July, the Lloyds house price index reveals.

The average property price is now £298,468, down from £299,153 in July.

On an annual basis prices have fallen by 0.4%, the first year-on-year decrease since November 2023.

Northern Ireland continues to record the strongest annual growth, with prices up 6.9% year-on-year.

The average property price in Northern Ireland now stands at an all-time high of £231,245.

Scotland property prices have also risen 3.5% over the past year to an average of £223,437, while in Wales annual growth stands at 0.6%, taking the typical property value to £230,282.

In England, northern regions have the strongest growth at 2.7% taking the average property price to £184,370. The North West saw prices rise to 2.0% to £248,675.

The South East saw the largest decline, with prices down 1.6% year-on-year to £381,729, followed by Greater London where prices fell 1.5% to £534,177.

The South West and Eastern England both recorded annual declines of 1.2%, with average prices of £298,807 and £331,410, respectively.

Commenting on the latest figures, Lloyds mortgages director Andrew Asaam says: “The housing market has faced a more difficult backdrop in recent months, with the impact of global events on inflation and borrowing costs creating greater economic uncertainty.”

“What we’re not seeing is a rush of homeowners cutting prices. But more are choosing to sit tight, with sellers reluctant to accept offers they feel are too low, while some buyers are waiting to see how conditions develop.”

“As a result, fewer homes are changing hands, with latest industry figures showing at their lowest level since the start of 2024.”

“It’s also important to keep recent price movements in perspective. Average house prices remain around 25% higher than they were at the end of 2019, despite the substantial increase to interest rates seen over recent years.”

“The market’s adjustment to higher borrowing costs has been gradual, with wage growth helping to offset some of the pressure on affordability. The recent modest declines in prices are best viewed in that wider context.”

Also commenting, Quilter financial planner Ian Futcher says: “Clearly, stretched affordability and an uncertain economic background has had a negative impact on house prices and unfortunately recent volatility in bond markets has the potential to put further pressure on mortgage rates.”

“Swap rates have risen sharply in recent days and some lenders have already begun adjusting pricing in response. For first-time buyers who have spent months building a deposit and carefully calculating what they can afford, sudden shifts in mortgage rates can pull the rug from under their feet just as they are preparing to make a move. This uncertainty is likely one factor behind the softer market conditions now emerging.”

“Attention will now turn to the Bank of England’s next decision on 17 September. While few expect policymakers to make any dramatic moves, the accompanying commentary could prove just as important as the decision itself.”

“Markets will be looking for clues on inflation and the future path of interest rates, with any shift in expectations likely to feed through to mortgage pricing.”

Propertymark chief executive Nathan Emerson adds: “Across the year so far, many people have, in some way, felt the direct impacts of ongoing global unease on their monthly outgoings.”

“We have witnessed many household costs continue to rise, while consumer affordability regarding housing has prompted a wave of caution, subsequently tapping the brakes on house price growth currently.”

“As we head into the autumn months, the upcoming Autumn Budget may well help determine the plans of many aspiring buyers and sellers for their next house move, alongside the upcoming inflation figures and interest rate announcement in the middle of the month.”

“Following what has, in part, been an uneven year, it is hoped that the housing market will regain a more stable footing as the year progresses.”