UK house prices continued their steady climb in August 2025, rising 0.3 percent (£932) to reach a record average of £299,331. Despite this, annual growth eased to 2.2 percent, reflecting a market that has prioritised stability over sharp fluctuations. Since January, prices have grown by less than £600, suggesting resilience in the face of wider economic uncertainty.

Affordability pressures remain, but gradual improvements are emerging. Interest rates have been edging lower for nearly two years, with competitive fixed-rate mortgages now available below 4 percent. Coupled with sustained wage growth outpacing house price inflation, conditions are becoming more favourable for prospective buyers. Encouragingly, mortgage approvals rose to a six-month high, signalling that underlying demand is firming even during the traditionally quieter summer months.

For first-time buyers, affordability has notably improved. Average property values in this segment slipped 0.6 percent since May to £237,577. On a 95 percent LTV mortgage, repayments now sit around £1,179, comfortably below the average private rent of £1,343. This shift may incentivise more renters to transition into ownership. Overall, the housing market outlook indicates a gradual but steady increase in prices, underpinned by improving affordability, robust wage growth, and resilient buyer demand.

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.