In July 2025, UK house prices posted a modest rebound, climbing 0.6% month‑on‑month after a 0.9% drop in June. The average property price reached £272,664, while the annual growth rate edged up to 2.4%, slightly above the 2.1% recorded in June and surpassing economists’ forecasts of around 2.1%.
The rebound followed the lapse of a stamp duty exemption in April, which had dampened demand in the prior quarter. Housing market activity appears to have steadied since, with transactional momentum holding up better than some had anticipated.
A key highlight of July’s data is the improvement in housing affordability. The price‑to‑income ratio fell to approximately 5.75, down from the record high of 6.9 seen in 2022. Nationwide’s Chief Economist Robert Gardner noted that this is the lowest affordability ratio in more than a decade and credited it to robust income growth, moderated house price inflation, and a slight easing in mortgage rates.
Mortgage borrowing costs have become somewhat less onerous. The typical five‑year fixed rate mortgage for a buyer with a 25% deposit stands at around 4.3–4.34%, down from roughly 5.7% in late 2023. Additionally, the Bank of England has signaled a downward shift, with many expecting the base rate to be trimmed from 4.25% to 4.0% at its upcoming 8 August policy decision, although elevated inflation—at 3.6% in June—may temper further reductions.
Mortgage approvals remain solid: around 64,200 loans were greenlit in July, reflecting sustained buyer activity and improved access to high loan‑to‑value lending options. Lending for remortgaging also saw its highest monthly level since October 2022, reinforcing the view that affordability is gradually easing and consumers remain engaged in property transactions.
Looking forward, forecasts suggest house price growth in 2025 will remain modest. Nationwide expects an annual increase of around 2%–4%, assuming wages continue to outpace price rises and borrowing costs decline gently. A media poll of forecasters pegged expected growth at approximately 3.5% for 2025, supported by credit easing and ongoing housing shortages.
Market observers caution that although affordability is improving, growth is expected to stay restrained. Analysts at Zoopla and Savills have downgraded their forecasts for 2025 to around 1%–2%, citing regional disparities, cautious buyer sentiment, and higher stamp duty costs weighing on demand, particularly in southern England.
In summary, July’s data points to a stabilising property market where house prices are rising gradually, incomes are catching up, and borrowing costs are inching down. While affordability has improved, growth remains subdued, and much depends on the Bank of England’s next moves and economic confidence in the months ahead.
