House prices climbed for the third month in a row in August as easing mortgage rates and continued wage growth helped support demand in the property market.
The Halifax House Price Index showed that the value of a typical home rose 0.3% month-on-month, taking the average price to £299,331. That figure is 2.2% higher than a year ago.
Amanda Bryden of Halifax said the market had shown resilience in 2025:
“The story of the housing market in 2025 has been one of stability. Since January, prices have risen by less than £600, underlining how steady the market has been despite wider economic pressures. While the wider economic picture remains uncertain, the housing market has shown over recent years that it can take these challenges in its stride.”
The latest rise comes as the number of homes available for sale reached a 10-year high in June, providing buyers with more choice.
Halifax noted that affordability pressures remain, but there are “signs of improvement” as lenders introduce more flexible affordability checks and mortgage rates continue to ease.
Price growth has moderated in recent months following a surge earlier in 2025, when many buyers rushed to complete purchases before the expiry of the stamp duty holiday.
UK Housing Market Faces Headwinds Amid Rising Borrowing Costs
The UK’s housing market is coming under renewed pressure as higher borrowing costs and a weakening labour market weigh on demand, according to economist Martin Beck of the WPI Economics consultancy.
His comments follow a surge in long-term borrowing costs, which briefly touched 5.75% on Wednesday morning — the highest level in 27 years — before easing back to 5.56% today after volatility in the bond market.
Beck warned that the outlook for the property market remains challenging:
“The headwinds are clear. Mortgage rates remain elevated by the standards of most of the last 15 years and rising bond yields are already pushing up the cost of fixed-rate loans. The jobs market is softening, consumer sentiment is fragile and speculation over property tax hikes in November’s Budget may cause some potential buyers to delay.”
The combination of high mortgage rates, a cooling jobs market and uncertainty over government policy is likely to test the resilience of the housing sector in the months ahead.
