Sharecast - House prices fell 4.6% on the year following a 2.5% decline in July. On the month, house prices were down 1.2% in August - the largest monthly fall since November 2022 - following a 0.4% dip a month earlier.
A typical home now costs £279,569, down by around £14,000 over the last year and back to the level seen in early 2022.
Halifax said Southern England and Wales are seeing the most downward pressure on property prices, while Scotland is showing greater resilience.
Kim Kinnaird, Director, Halifax Mortgages, said: "Market activity levels slowed during August, and while there is always a seasonality effect at this time of year, it also isn’t surprising given the pace of mortgage rate increases over June and July. While these did ease last month, rates remain much higher compared to recent years. This may well have prompted prospective buyers to defer transactions in the hope of some stability, and greater clarity on the future direction of rates in the coming months.
"The market will continue to rebalance until it finds an equilibrium where buyers are comfortable with mortgage costs in a higher range than seen over the previous 15 years. We do expect further downward pressure on property prices through to the end of this year and into next, in line with previous forecasts."
Imogen Pattison, assistant economist at Capital Economics, said: "The steep fall in the Halifax House Price Index in August confirmed that the further leg down in house prices we have been forecasting has materialised.
"If we are right to think that mortgage rates will remain around current levels (5.5-6.0%) for the next 12 months, demand will remain weak which we think will cause a further 5.5% drop in house prices."