This compares to an annual house price growth rate of 2.1% in July, according to Nationwide’s House Price Index.
The average house price in August stood at £265,375, which is up from £266,334.
The report added that monthly house price changes came to negative 0.2%, compared to 0.3% in July.
Robert Gardner, Nationwide’s chief economist, said that prices were still around 3% beneath the “all-time highs recorded in the summer of 2022”.
He continued: “While house price growth and activity remain subdued by historic[al] standards, they nevertheless present a picture of resilience in the context of the higher-interest-rate environment and where house prices remain high relative to average earnings (which makes raising a deposit more challenging).
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“Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”
Decarbonising housing stock ‘critical’ to meeting EPC targets
Gardner said that decarbonising and adapting UK housing stock was “critical” to meeting 2050 emissions targets, given that residential buildings make up 15% of the country’s emissions.
Nationwide has used its house price data to look at the extent to which owner-occupiers pay a premium or discount for a home due to its energy performance rating by including energy-efficiency ratings alongside usual property characteristics.
The research found that A- or B-rated properties have a “modest premium” of 2.8% compared to a similar D-rated properties, which is the most common property in the UK.
Nationwide added that there was little difference for properties rated C or E compared with D, but there was a “noticeable discount” for properties rated F or G, as it is 4.2% lower than a similar D-rated property.
“Our research suggests while energy-efficiency impacts remain relatively modest, they have increased relative to pre-pandemic levels, with A/B properties now attracting a larger premium compared with 2019 and F/G properties seeing a larger discount, as shown in the chart below.
“The value that people attach to energy efficiency is likely to continue to evolve, especially if the Government takes measures to incentivise greater energy efficiency to help ensure the UK meets its climate change obligations,” Gardner explained.
Nationwide said that around half of housing stock is rated C or higher, a rise from 18% in 2012.
It said figures show that if all applicable energy improvement measures were applied to all dwellings with ratings below C, around 96% of properties would move up to an A or C rating, but 4% of properties would not go beyond a D rating.
The average cost to improve a dwelling to a C rating was £7,400, with dwellings with an E or G rating getting to a C requiring £13,500 and D-rated homes needing £6,200.
Gardner said that the “current pace of energy-efficiency improvements is relatively slow, given the scale of the challenge”.
Summer has ‘marked a recovery’ in house prices
Karen Noye, mortgage expert at Quilter, said that August usually sees a “slowdown” as people “focus on holidays rather than house hunting”, but the summer had “marked a recovery after several months of relatively flat results, reflecting the challenging economic conditions but a strong housing market”.
She continued: “As conditions become more predictable, both buyers and sellers are gaining confidence that they can achieve their housing goals without the looming threat of mortgage shocks, which might mean there is a bounce in prices in the autumn.
“The recent decision by the Bank of England to cut its base rate from 5.25% to 5% has further bolstered this confidence, even though the cut’s direct impact on tracker mortgages and standard variable rate [SVR] mortgages will be relatively minor, and fixed rate mortgage costs have largely already factored in this small reduction.”
Noye said that as a large number of borrowers were on fixed rate deals, it has “so far cushioned many from the full impact of rising interest rates”.
“However, as these deals begin to expire, the market could face renewed pressure, particularly if further rate cuts are slower or less substantial than anticipated, which could curtail house price growth later this year and next.
“Prospective buyers now face a dilemma: whether to lock in a fixed rate mortgage now or opt for a tracker mortgage that allows them to benefit from potential future rate cuts. However, the appeal of fixed rate deals, offering certainty in uncertain times, continues to attract many,” she added.
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Annual house price growth rises to 2.4% in August – Nationwide
