UK house prices fell 0.2% month on month in August with the annual growth rate picking up to 2.4%, from 2.1% in July.
This is the fastest pace of annual growth since December 2022 and there has been a shift of focus in that time as energy efficiency is becoming more important in influencing what buyers will pay for a home.
| Headlines | Aug-24 | Jul-24 |
| Monthly Index* | 525.4 | 526.4 |
| Monthly Change* | -0.2% | 0.3% |
| Annual Change | 2.4% | 2.1% |
| Average Price(not seasonally adjusted) | £265,375 | £266,334 |
* Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)
Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said:
“UK house prices fell by 0.2% month on month in August, after taking account of seasonal effects, but the annual rate of house price growth continued to edge higher. Average prices were up 2.4% year on year, a slight pickup from the 2.1% recorded in July and the fastest pace since December 2022 (2.8%). However, prices are still around 3% below the all-time highs recorded in the summer of 2022.
“While house price growth and activity remain subdued by historic 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).
“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.
Price premium for energy efficient properties
“Decarbonising and adapting the UK’s housing stock remains critical if the UK is to meet its 2050 emissions targets, especially given that emissions from residential buildings account for 15% of the country’s greenhouse gas emissions. With this in mind, we’ve used our house price data to examine the extent to which owner occupiers pay a premium or discount for a home due to its energy performance rating.
“To do this, we included energy efficiency ratings from energy performance certificates (EPCs) alongside the usual property characteristics we use in our index. This allows us to control for other factors that can influence the value of a house or flat, such as the number of bedrooms, location and whether it is newly built.
“Our analysis suggests that a more energy efficient property, rated A or B, attracts a modest premium of 2.8% compared to a similar property rated ‘D’ (the most commonly occurring rating). There is little difference for properties rated C or E compared with D, as shown in the chart below.
