Market activity and house prices have remained subdued in recent months, partly reflecting the uncertain economic backdrop, the building society said.
The average UK house price edged up by 0.2% month-on-month in August, following a 0.1% dip in July, according to an index.
Property values increased by 1.6% on average annually in August, up from 1.4% annual growth in July, Nationwide Building Society said.
Across the UK, the average house price in August was £275,465.
Robert Gardner, Nationwide’s chief economist, said: “Market activity and house prices have remained subdued in recent months, in part reflecting the uncertain economic backdrop.
“Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices and market interest rates.
“Market expectations of the future path of (the Bank of England base rate) have been volatile.
“While the latest energy price shock poses inflation risks, there have been encouraging signs that it is not feeding through to underlying price pressures.
“Indeed, private sector wage growth has eased further in recent months, which should give policymakers breathing space to assess the extent to which tighter policy is necessary to ensure inflation returns sustainably to target.
“Underlying affordability is improving, as house price growth remains well below earnings growth although some of these gains have been offset by higher mortgage rates.
“Nevertheless, this suggests that activity should regain momentum in the quarters ahead providing the energy shock wanes and confidence returns, especially if market interest rates fall back towards pre-conflict levels.”
Nationwide said the UK house price index had been revised for July 2026 because of a system change.
Nathan Emerson, chief executive at property professionals’ body Propertymark, said: “The wider economy continues to be finely balanced, with many factors continuing to prove an unwelcome undercurrent for consumer affordability.
“Across the year to date, there have been many challenges to navigate, with average energy prices climbing, inflation still higher than targeted and the base rate remaining higher than many might prefer.”
Ian Futcher, financial planner at wealth manager Quilter said: “Ultimately, demand for homeownership remains strong, but affordability and interest rate expectations will continue to dictate the pace of the market.
“Greater confidence that borrowing costs are on a stable path would provide a meaningful boost to activity, but for now caution continues to prevail.”
