Annual house price growth picked up in August to the fastest rate since December 2022, says index

This took the typical house price to £265,375.

Robert Gardner, Nationwide’s chief economist, said: “UK house prices fell by 0.2 per cent 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 per cent year-on-year, a slight pick-up from the 2.1 per cent recorded in July and the fastest pace since December 2022 (2.8 per cent).

“However, prices are still around 3 per cent 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.

“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.”

Yopa chief executive Verona Frankish said: “Today’s figures provide the first look at house price performance since interest rates were cut at the start of August and despite the very marginal monthly decline, it’s clear that the first reduction in four years has helped to further boost the market momentum, with yet another strong rate of annual house price growth being seen.

“Whilst the base rate remains considerably higher than many buyers and sellers may be accustomed to, the expectation is that another cut will come before the year is out, which should only help to strengthen buyer appetites further.”

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the wealth manager said: “The UK’s residential property market appears to be in recovery mode following the turbulence of 2023 when high borrowing costs and low supply stifled activity and dampened prices.

“With more sub-4 per cent mortgage rates now available and the prospect of more interest rate cuts this year, buyers are flooding back into the market as improving affordability levels raise the likelihood that people can net their desired home.

“Meanwhile, sellers, who have been sitting on the sidelines waiting for better market conditions, now feel confident to list their homes, though those hoping for a good deal may find the glut of new properties for sale along with mortgage rates that are still relatively high could keep a lid on prices for now.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The days of rock-bottom mortgages may be long gone but more palatable pricing is helping sentiment.

“Now that the Bank of England has reduced rates, it sends out a strong message that they have not only peaked but are on a downwards trajectory after months of uncertainty. It enables people to make decisions with confidence and we anticipate a strong autumn market although the Budget looms ominously.”