In August, house prices in the UK unexpectedly fell month-on-month, causing home buyers to be caught in a dilemma of being unable to afford and fearing tax hikes.

The Nationwide Building Society, a UK mortgage lender, said on Monday that the unexpected drop in UK house prices in August was due to buyers struggling to afford high-priced properties. The institution pointed out that house prices in August fell by 0.1% compared to July, marking the third monthly decline since April (when the tax breaks for many low-value property buyers expired). Compared to the same period last year, house prices in August rose by 2.1%, which is the same growth rate as in June last year and the lowest level since then. Previously, economists surveyed by Reuters had predicted a 0.2% increase in house prices month-on-month in August, with a 2.8% increase year-on-year. By the end of last year (before the stamp duty exemptions expired), house prices in the UK were rising by nearly 5% year-on-year. Robert Gardner, Chief Economist at Nationwide, said, "Given that housing affordability is still below long-term normal levels, it is perhaps not surprising that house price growth remains relatively subdued." He further explained that an average income earner buying a typical first-time home with a 20% down payment currently sees their monthly mortgage payments account for about 35% of their after-tax income, much higher than the long-term average of 30%. The Bank of England lowered the base rate from 4.25% to 4% on August 7, but also expressed concerns about inflationary pressures in the economy, which could slow down further decreases in borrowing costs. Last month, the Royal Institution of Chartered Surveyors said that the housing market recovery had lost momentum as some buyers were worried that Chancellor Rachel Reeves might raise taxes in the next budget. Ashley Webb, an economist at Capital Economics, said, "In the coming months, market risks lie in speculation about potential property taxes (such as a mansion tax) in the autumn budget, which could further dent buyer confidence."