UK house prices grew at their slowest pace this year, according to new data from Nationwide. Annual growth slipped to 2.1% in August, down from 2.4% in July, while monthly figures showed a slight fall of 0.1%. The average home now costs £271,079. While this is still high compared to household incomes, it shows the housing market is losing some of the heat it had earlier in the year.
Government Looks at Tax Reforms
The slowdown comes as the government prepares its Autumn budget, where property tax reforms could be on the table. Reports suggest options being discussed include scrapping stamp duty, changing council tax into a new national property tax, or even adding a levy on landlords.
Some experts believe getting rid of stamp duty could make it easier for people to move homes, speeding up the market. But others warn this could cost the government billions in lost tax revenue. Nationwide’s chief economist, Robert Gardner, said the UK needs “a tax system that allows people to move more effectively.”
Housing Still Feels Out of Reach
Even though price growth has slowed, many people still struggle to buy a home. Prices remain far above average earnings, making deposits difficult to save. Mortgage costs are also weighing heavily on buyers. According to Moneyfacts, the average two-year fixed mortgage rate is now 4.96%, while a five-year deal sits at 5%. That makes monthly repayments much more expensive than they were just a few years ago.
Are Things Getting Easier for First-Time Buyers?
There are a few signs of hope. The Bank of England cut interest rates in August, and further cuts could follow. If that happens, mortgage rates may fall and ease the pressure on repayments. Economists also expect wages to rise faster than house prices over the coming months. If true, this could help narrow the affordability gap, though experts warn the benefits may be slow to arrive.
What’s Next for Homeowners and Buyers?
All eyes are now on Chancellor Rachel Reeves and the Autumn budget. Any changes to stamp duty, council tax, or landlord taxes could reshape the housing market for years to come. For now, high mortgage rates, expensive homes, and cost-of-living pressures continue to make life tough for buyers. But if interest rates keep falling and incomes rise, the picture may start to improve slowly but surely. Housing remains one of the biggest issues facing families across the UK, and the next few months could prove decisive in shaping whether the market finally becomes more affordable.