According to the Halifax, house prices rose 0.3 percent on the month in August, a tick stronger than the market consensus and following a marginally steeper revised 0.9 percent spurt in July. With prices falling sharply a year ago, annual inflation climbed from 2.4 percent to 4.3 percent, its highest mark since November 2022. The average UK house price is now £292,505, a level not seen since August 2022 and just £1,000 shy of its record peak.

At the same time, the 3-monthly change increased from 0.1 percent in July to 0.8 percent, matching its firmest print since March and showing a clear uptrend in underlying prices. Moreover, with market activity gaining momentum and further interest rate reductions likely, the Halifax expect prices to continue their modest growth over the remainder of the year.

The August report contrasts with the Nationwide survey released earlier which showed prices slipping 0.2 percent on the month. However, both measures show a rising underlying trend. More generally, today's update puts the UK RPI at minus 4 and the RPI-P at exactly zero, meaning that overall economic activity is essentially moving in line with market expectations.

Prices are expected to rise a monthly 0.2 percent following a surprisingly strong 0.8 percent increase in July.

The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and the basic methodology remain unchanged. However, in May 2020, the annual growth measure was changed from the average of the last three months to just the latest month.

Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.