The annual rate of house price growth rose modestly in July, reaching 2.4%, up from 2.1% in June, according to the latest data.
On a monthly basis, prices increased by 0.6%, continuing the market’s steady recovery.
Meanwhile, the UK house price-to-earnings ratio has fallen to approximately 5.75—its lowest level in over a decade—suggesting a gradual improvement in affordability for prospective buyers.
* Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated) Commenting on the figures, Robert Gardner, Nationwide’s chief economist, said: “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. “Looking through the volatility generated by the end of the stamp duty holiday, activity appears to be holding up well. Indeed, 64,200 mortgages for house purchase were approved in June, broadly in line with the pre-pandemic average, despite the changed interest rate environment.  Gardner continued: “After deteriorating markedly in the wake of the pandemic, housing affordability has been steadily improving, thanks to a period of strong income growth alongside more subdued house price growth and a modest fallback in mortgage rates. “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 and is currently the lowest this ratio has been for over a decade. This is helping to ease deposit constraints for potential buyers, as has an improvement in the availability of higher loan to value mortgages.  According to Nationwide, the interest rate on a typical five-year fixed-rate mortgage is around 4.3% (for a borrower with a 25% deposit). This is still over three times the all-time lows prevailing in autumn 2021, but well below the highs of c5.7% reached in late 2023.  Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive. Gardner explained: “Unemployment remains low, earnings are still rising at a healthy pace (even after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little further if Bank Rate is lowered further in the coming quarters as we, and most other analysts, expect. “Providing the broader economic recovery is maintained, housing market activity is likely to continue to strengthen gradually in the quarters ahead.” |
Industry reaction:
Verona Frankish, CEO of Yopa: “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.”
Matt Thompson, head of sales at Chestertons: “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.”
Jeremy Leaf, north London estate agent: “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.”
Nathan Emerson, CEO at Propertymark: “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.”
Marc von Grundherr, director of Benham and Reeves: “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.”
Jason Tebb, president of OnTheMarket: “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.”
Tom Bill, head of UK residential research at Knight Frank: “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.”
Amy Reynolds, head of sales at Antony Roberts: “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.”
Jonathan Hopper, CEO of Garrington Property Finders: “The balance between supply and demand is tipping further in favour of buyers.
“The summer surge usually sees estate agents’ books fill up. But this summer’s crop of new listings is being swelled by properties that were withdrawn from sale during last year’s uncertainty, as well as the thousands of homes being sold off by disenchanted buy-to-let investors.
“Despite the modest increase in Nationwide’s national rate of price inflation, in many areas prices are either flat or falling – there are simply too many sellers and not enough serious buyers.
“Most sellers aren’t financially distressed, but in many parts of the country those who are serious about selling are having to rein in sharply their price aspirations.
“Token price reductions of £5,000 to £10,000 just won’t cut it, and those who set their asking price too high risk seeing their home sit unsold on the shelf as buyers are spoilt for choice.
“Bank of England data shows that the average mortgage interest rate for buyers has now fallen for four months in a row, and the prospect of a further base rate cut next week could make borrowing more affordable still, and inspire more renters to consider buying.
“Even though Nationwide’s data shows that homes are now mathematically more affordable than they have been in a decade, buyer sentiment is finely balanced. Cheaper borrowing costs and abundant choice mean this is a buyer’s market, but most buyers are still being prudent and pragmatic and sellers must dance to their tune.”
Iain McKenzie, CEO of The Guild of Property Professionals: “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.
“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.
“For sellers, realistic pricing is crucial to capture buyers’ attention in a more competitive landscape. For buyers, the combination of more choice and the likelihood of further mortgage rate improvements creates a compelling window of opportunity. Acting now could mean securing a favourable deal before the competition heats up further.
“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.”
