Lloyds HPI: Average house price edged down in August

Through recent Bridging Loan Directory reporting, the clearest change has been the consequences of slower sales and lower valuations rather than a simple collapse in demand.

One broker reported around 10 to 12 cases involving valuation or sale-time problems since March, including residential down-valuations in Birmingham and elsewhere. Some borrowers refinancing existing loans could not provide the additional equity required, leaving them exposed to default interest or threatened receiver appointments when properties failed to sell before their facilities expired.

Another broker said chain-breaking and development-exit enquiries had risen from around 20–25 per cent of enquiries in the first quarter to 35–40 per cent. Exit periods were being extended from six months to nine or 12 months, with lower leverage used where properties had already been marketed unsuccessfully.

These are individual brokers’ experiences, not the whole market, but they show how a modest movement in average pri

From the mortgage desk, demand hasn’t disappeared, but buyers are noticeably more cautious and price-sensitive. They’re still viewing and making offers, although often below the asking price, with monthly affordability driving decisions more than headline house prices.

Realistically priced properties are still attracting interest, while those launched too ambitiously tend to sit on the market. Compared with June, buyers appear more willing to negotiate and less prepared to stretch themselves just to secure a property.

What we're seeing right now is a clear gap between what sellers think their home is worth and what the market will pay. When buyers push back on an inflated price, valuations often come in fine at the lower figure, which says the property was overpriced, not that lenders are being cautious. Demand hasn't dried up, more first-time buyers are viewing than a few months ago, but it's taking longer to match buyer to property at the right price. Realistically priced homes are still selling close to asking, the ones losing out are sellers whose agents talked up an ambitious price to win the instruction and can't deliver it, so the property sits, loses momentum day by day, and gets chased down anyway, often lower than if priced right from the start. We're seeing hardly any pull-outs, buyers commit once they find the right home, they're just taking longer to find it. This correction is affordability, not nerve.

House prices edging down slightly does not mean buyers suddenly feel the market has become cheap. The bigger issue we see is monthly affordability: buyers are much more focused on the payment than the headline asking price, and that makes them quicker to negotiate or walk away if a property feels stretched. Sensibly priced homes can still attract committed buyers, but over-ambitious asking prices are more likely to sit. The market feels selective rather than weak, with affordability and realistic pricing doing far more to determine whether a transaction moves than small monthly changes in an index.

With rates going up and boundless volatility in the market many buyers are being cautious. Buyers and developers alike are quite often applying a 'wait and see' strategy. Combining this with so much stock on the market idling for months it's not a wonder we have seen this index edge down slightly. More confidence in the market will bring this back.

We have observed a 25% reduction in activity across the end of July and the entirety of August. Driven by a decrease in buyer demand. Across the south of England. Many agents were holding new to market stock in the hope that launching at the start of September would generate some new interest but this isn’t the only factor at play here. Whilst usually a busy autumn precedes a quiet summer, this is not guaranteed in the wake of a potential rise in borrowing costs and an uncertain budget ahead.