UK house prices rose again in July with annual growth edging up to 2.4% as affordability improves and confidence tentatively returns to the housing market, figures from the latest Nationwide House Price Index revealed on Friday last week.
Prices were up 0.6% month-on-month, marking the fifth consecutive monthly increase and suggesting that the market is continuing to stabilise after a period of volatility triggered by rate rises and cost-of-living pressures.
Importantly, affordability metrics are beginning to shift in favour of buyers.
The house price-to-earnings ratio now sits at around 5.75 – its lowest level in over a decade and well below the record high of 6.9 reached in 2022.
FIRST-TIME BUYERS
This improvement, driven by rising wages and slower house price growth, is making deposits more manageable for first-time buyers.
Robert Gardner, Nationwide’s Chief Economist, says: “July saw a modest pick-up in the rate of annual house price growth to 2.4%, from 2.1% in June. Prices increased by 0.6% month on month, after taking account of seasonal effects.”
He adds that “activity appears to be holding up well,” with 64,200 mortgage approvals for house purchase in June, broadly in line with the pre-pandemic average, despite the continued impact of higher interest rates.
And he says: “While the price of a typical UK home is around 5.75 times average income, this ratio is well below the all-time high of 6.9 recorded in 2022. This is helping to ease deposit constraints for potential buyers, as has an improvement in the availability of higher loan to value mortgages.”
INDUSTRY REACTION
Tom Bill, head of UK residential research at Knight Frank, says: “The housing market is getting back on its feet after a slowdown in the second quarter of the year due to the stamp duty cliff edge in April and a general mood of economic uncertainty.
“Mortgage rates are at similar levels to last October before the Budget, which has supported demand, although sticky inflation means a probable cut by the Bank of England next week may only be followed by one more this year.
“Despite a modest uptick in July, high levels of supply are keeping a lid on prices and means it is still very much a buyers’ market.”
NOTABLY POSITIVE
Guy Gittins, Chief Executive of Foxtons, says: “The latest Nationwide figures show that the monthly decline seen in June has already reversed.
“While the return to monthly growth is welcome, it’s the annual rate of growth that offers a clearer view of market resilience amid a still uncertain economic backdrop.
“The first half of the year was notably positive, with a strong Q1 driven by increased buyer activity acting ahead of the of the stamp duty deadline.
“Although Q2 brought a more measured pace, demand has remained resilient in the face of elevated borrowing costs and ongoing economic uncertainty.
“Recent government action to ease lending constraints, including the new mortgage guarantee scheme, is encouraging, but its impact may be limited without broader reforms, particularly a review of stamp duty, to help stimulate activity and improve access to home ownership.”
SUFFICIENT PRICE GROWTH ESSENTIAL
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “The ‘up a bit’ in prices following last month’s ‘down a bit’ is hardly surprising given the considerable overhang of available property in most price ranges.
“But sufficient price growth is essential to ensure there continues to be a good supply of listings and offers.
“On the ground, transactions are holding together relatively well. As a result, looking forward we expect to see a modest improvement all round, particularly if interest rates are reduced in the next month or so as widely expected, despite lingering concerns about the economy.”
BALANCED MARKET
Iain McKenzie, Chief Executive of The Guild of Property Professionals, says: “Today’s Nationwide figures, showing a firming of annual house price growth to 2.4%, is another clear signal that the property market has found its footing and is building positive momentum.
“The steady 0.6% month-on-month increase is exactly the kind of sustainable, confident growth we have been anticipating.
“This isn’t a market running hot, but one that is responding logically to improved conditions.
“The driving force behind this stability is growing borrower confidence, which is being fuelled by an increasingly favourable mortgage environment. Mortgage approvals are rising, and transaction volumes are climbing steadily month-on-month and year-on-year.
“All eyes are now on the Bank of England. While the Bank is rightly walking a tightrope between managing inflation and stimulating the economy, the widespread expectation of at least one rate cut before the end of the year is providing a psychological boost to the market.
“This is a balanced market, not a runaway one.”
“However, this is a balanced market, not a runaway one. Buyers remain discerning and price-sensitive, and the significant increase in the number of properties for sale is giving them more choice and negotiating power.
“This increased supply is acting as a natural handbrake, ensuring that price growth remains modest and grounded in reality, which is fundamentally healthy for the long-term.
“Overall, this data paints a picture of a resilient market. We’ve moved beyond recovery and into a phase of considered, confident activity that we expect to carry through the second half of the year.”
STEADY ACTIVITY
Jason Tebb, President of OnTheMarket, says: “Despite the summer months traditionally being a quieter period for the housing market, and even with much uncertainty prevailing in the wider economy, there is still plenty of evidence of steady activity.
“Average house prices are being kept in check by an increase in stock, which is putting buyers in a stronger position.
“With the market settling after the upheaval of the stamp duty concession, interest rate reductions are going to be more vital than ever when it comes to encouraging activity and momentum.
“Four quarter-point base-rate cuts since last August have improved affordability and the ability to plan ahead with confidence. Further reductions, perhaps as soon as next week, will give the market added impetus as we head into the autumn.
“Lenders continue to trim rates and ease criteria following changes in the way mortgage regulations are applied, which is further assisting borrowers who are still dealing with stubborn inflation and the higher cost of living.”
CONTINUED STABILITY
Marc von Grundherr, Director of Benham and Reeves, says: “The monthly rate of house price growth has been unpredictable of late, however, July saw the decline of the previous month reversed and we continue to see a consistently strong performance where the annual rate of growth is concerned – which is a far better indicator of the health of the market.
“This overarching air of positivity has been driven by buyers returning with confidence and, since March of last year, we’ve seen mortgage approvals remain above the 60,000 threshold.
“With this figure having also increased over the last two months, we can expect continued stability in house prices for the remainder of the year, as more buyers look to make their move.”
SELLERS MUST REMAIN REALISTIC
Verona Frankish, Chief Executive of Yopa, says: “July was a wholly positive month for the market, with house prices seeing positive movement both on a monthly and annual basis.
“Recent improvements in mortgage market affordability, including the move to increase income lending multiples and the decision to launch a permanent Mortgage Guarantee Scheme, should help ensure that buyer activity remains consistent and house prices continue to strengthen.
“However, it’s important to remember that the homebuying process remains challenging for many, and while market sentiment is positive, sellers must remain realistic when pricing for current market conditions if they wish to secure a sale.”
WINDOW OF OPPORTUNITY
Matt Thompson, Head of Sales at Chestertons, says: “We have been seeing house hunters pausing their search amid the economic climate and level of interest rates but many feel that the property market now provides a window of opportunity as more properties are up for sale.
“Last month alone, some of our branches have seen an evident uplift in the number of vendors wanting to sell which has motivated more buyers to resume their search and make an offer.
“With the Bank of England likely to lower interest rates next week, we expect more buyers to proceed with their property search over the coming weeks.”
NO SUMMER SLOWDOWN
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “Nationwide reports what we have also found in our offices – that the property market isn’t slowing down for summer.
“While we braced ourselves for a long, quiet stretch until September when the schools return from their summer break, we’re already back in full swing: valuing good houses, agreeing off-market sales, and running packed diaries of viewings.
“The general sentiment is that interest rates will come down, and the Spring market, which never really got going, thanks to uncertainty surrounding President Trump’s tariffs, has left a degree of pent-up demand. There isn’t a huge sense of urgency, and it isn’t a seller’s market, but it is a market.
“Buyers are pragmatic about what they want and what they’ll pay. If a property is priced correctly and meets the right needs, the buyer will be there – and this is playing out across all price brackets.”
RATE REDUCTION WOULD BE WELCOME
Nathan Emerson, Chief Executive at Propertymark, says: “This shows that the UK’s housing market remains stable at a time when numerous domestic and international factors are impacting the wider economy.
“With continued talk of a gradual easing of interest rates, even while inflation remains above the Bank of England’s targeted rate of 2%, it is vital that this results in more affordable mortgage products for aspiring buyers and home movers.
“Many people are delaying paying off their mortgages until later in life via 35-year or 40-year mortgages. Therefore, a reduction in interest rates would be very welcome to help offset ongoing financial pressures and worries over the cost of living for many.”
GROWTH SUBDUED
Daniel Austin, Chief Executive and Co-founder at ASK Partners, says: “Today’s rise in property prices brings some optimism, but growth remains subdued as high borrowing costs continue to weigh on buyers.
“While the Bank of England’s decision to hold rates offers limited reassurance, persistently elevated fixed mortgage rates are still delaying meaningful relief.
“The construction sector is already grappling with soaring build costs, planning bottlenecks, and a chronic shortage of skilled labour. Investors and developers remain motivated by the enduring supply-demand imbalance, particularly in resilient sectors such as co-living and build-to-rent.
“For investors seeking stability amid global uncertainty, including market volatility triggered by resurgent US protectionism, UK real estate debt continues to stand out. It offers capital preservation, steady income, and insulation from equity market swings, making it an increasingly attractive alternative in this environment.”
RESILENT MARKET
Tom Brown, Managing Director, Real Estate at Ingenious, says: “Today’s data underscores the continued resilience and appeal of the UK property sector despite elevated inflation and stubborn borrowing costs. We have welcomed the BoE’s recent rate cut as a hopeful first step in a much-needed easing cycle.
“There’s clearly a significant and notable shortage of housing inventory across various price brackets and locations. Consequently, any decline in homeowner sales is likely counterbalanced by increased demand from renters and investors.
“The situation isn’t consistent nationwide.”
“This is a trend that is not going away. However, it’s crucial to recognise that the situation isn’t consistent nationwide or across different property pricing brackets.
“It’s helpful to delve into subsectors and regional dynamics when assessing opportunities, as a broad market view can be misleading.
“In the real estate sector, we’re seeing significant investment capital for assets for long-term rental. On account of their scale and buying power, these typically institutional investors face fewer disruptions than owner occupiers or small-scale buy-to-let investors.
