House prices rose at a faster monthly pace in August than in July but a slowdown in the housing market is expected as the UK's cost-of-living crisis worsens, mortgage lender Nationwide has said.
Annual growth slowed to 10 per cent in August, from 11 per cent in July, according to the building society’s house price index.
However, prices were up 0.8 per cent month-on-month, marking the 13th month in a row that average prices have risen.
The volume of properties up for sale remains below the level of demand from people wanting to buy, so asking prices are still being driven up, the group said.
But Nationwide warned that an increase in energy costs coupled with mortgage interest rates rising will put household budgets under pressure in the coming months.
It said that the least energy efficient property could typically see bills surge by £2,700 ($3,100) a year, or £225 a month.
This comes as analysts predict the Bank of England will further increase interest rates from the current 1.75 per cent base rate.
Robert Gardner, Nationwide's chief economist, said there were signs that the housing market was losing momentum after the surge in demand for bigger homes during the Covid-19 pandemic.
“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters,” Mr Gardner said.
Britain's most widely followed inflation index rose to 10.1 per cent in the 12 months to July, a 40-year high, and is set to climb further on the back of accelerating energy prices.
The BoE has raised interest rates six times since December as it tries to deal with the surge in inflation.