Homebuyers needed £294,260 to afford a property in the UK as the average house price rose 0.4% in August.
Across the UK, property values were up by 11.5% annually in August, according to Halifax.
“While house prices have so far proved to be resilient in the face of growing economic uncertainty, industry surveys point towards cooling expectations across the majority of UK regions, as buyer demand eases, and other forward-looking indicators also imply a likely slowdown in market activity,” Kim Kinnaird, director of Halifax Mortgages, said.
“Firstly there is the considerable hit to people’s incomes from the cost-of-living squeeze. The 80% rise in the energy price cap for October will put more pressure on household finances, as will the further increases expected for January and April. At the levels being predicted, this is likely to constrain the amounts that prospective homebuyers can afford to borrow, on top of the adverse impact of higher energy prices on the wider economy,” she added.
Wales remains at to the top of the table for annual house price inflation, up by 16.1%, the strongest level of growth since early 2005. This means average prices have risen by £31,246 over the last year, with an average property now costing £224,858.
The South West of England also continues to record a strong rate of annual growth, up by 14.5%, with an average property cost of £313,003.
The rate of annual growth in Northern Ireland eased back further last month to 12.5%, with a typical home now costing £185,505.
Scotland also saw another slowdown in the rate of annual house price inflation, to 9.4% from 9.5%. A Scottish home now costs an average of £204,362, another record high for the nation.
While London has continued to lag behind other nations and regions, the rate of annual house price inflation in London rose again to now stand at 8.8%, its highest level in over six years. With a typical property costing a record £554,718 the capital’s average house price has risen by £44,669 over the last 12 months.
“With house price to income affordability ratios already historically high, a more challenging period for house prices should be expected,” Kinnaird warned.
The latest Bank of England figures show the number of mortgages approved to finance house purchases increased in July 2022, by 0.9% to 63,770.
“Mortgage holders with fixed-rate deals expiring in the next few months are potentially facing a borrowing shock if rates continue to jump up – but it might be worth waiting to see what Truss has in store before making any big decisions," Alice Haine, personal finance analyst at Bestinvest, said.
“Perhaps those suffering the most in this uncertain housing market are the renters, many of whom are not only facing higher household bills but also rent hikes as landlords look to pass on rising costs to their tenants. If they are saving for a deposit to buy their own home, they might have to accept they may be renting longer than planned as other financial considerations take priority – namely more expensive energy and food bills," she added.
HMRC monthly property transactions data also revealed that UK home sales increased in July 2022. UK residential transactions in July 2022 hit 104,470, up by 3.2% from June’s figure of 101,190.
"We’re also seeing a far greater degree of caution from lenders which is increasing the likelihood of a down valuation even after a price has been agreed by buyer and seller. This is leaving them adrift by around £8,000 on average and it’s only a matter of time before this market instability shows its face where topline property values are concerned," Chris Hodgkinson, managing director of HBB Solutions, said.
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