House prices fell last month as fears grow that Labour could target homeowners with new taxes in the upcoming Budget.
The average price of a UK home dropped by 0.1% between July and August to £271,079, figures from Nationwide show. That’s down from £272,664 the month before.
Experts had predicted a small rise of 0.1%, but instead the market took a surprise dip. Annual growth also slowed, with prices up 2.1% compared with a year earlier, down from 2.4% in July.
The fall comes as Rachel Reeves is said to be weighing up fresh property tax measures. Proposals on the table include a mansion tax on expensive homes and scrapping tax breaks on sales of high-value main residences.
The slowdown is striking given the Bank of England cut interest rates from 4.25% to 4% last month, a move that would normally boost demand.
Analysts say affordability remains a major hurdle, with house prices still high compared to wages and mortgage costs eating into household budgets.
Sellers are starting to lower asking prices to secure deals, while buyers are holding off as they wait to see what the Budget delivers.
Industry forecasts suggest growth will stay weak for the rest of the year as tax fears, high borrowing costs and a fragile economy weigh on the market.
