UK house prices rose by 0.6% in July, regaining ground after a 0.9% dip in June. Improved affordability and falling mortgage rates signal growing market stability.
Key Points
- Average UK home price: £272,664 (up from June)
- Monthly price increase: +0.6% in July
- Annual growth: 2.4%, slightly up from 2.1% in June
- Mortgage approvals: Over 64,000 in June
- Five-year fixed mortgage rates: Now around 4.3%
- Affordability: At the best level in over a decade
Market Regains Momentum After June Dip
UK house prices showed a steady rebound in July 2025, rising by 0.6%, according to Nationwide. This follows a sharp drop in June when the market cooled after a short-term stamp duty relief ended. The average cost of a UK home now stands at £272,664, signaling renewed confidence among buyers and sellers.
Nationwide’s report shows that the annual rate of price growth rose modestly to 2.4%, up from 2.1% in June. This minor increase suggests the market remains cautious but resilient despite recent shifts in government policy and inflation pressures.
Affordability at 10-Year Best
According to Robert Gardner, Chief Economist at Nationwide, affordability has improved significantly. The house price-to-income ratio now stands at 5.75×, the lowest in over ten years. Several factors are contributing to this improvement, including strong wage growth, slower property price rises, and lower mortgage interest rates.
Gardner noted that this shift is making it easier for first-time buyers to enter the market and encouraging existing homeowners to make their next move.
Lower Interest Rates Ease Borrowing
Mortgage rates have also started to drop. A typical five-year fixed-rate mortgage for buyers with a 25% deposit now sits between 4.3% and 4.34%, down significantly from the 5.5% seen in 2023. These falling rates are helping boost market activity, with over 64,000 mortgage approvals recorded in June alone.
The expected interest rate cut by the Bank of England in its upcoming August meeting could further ease borrowing and strengthen buyer interest. Markets are anticipating a cut from 4.25% to 4.0%, with further reductions possible by the end of 2025.
Outlook Remains Cautiously Optimistic
Although recent inflation data showed a rise to 3.6% in June, economists believe that the broader economic trend supports a more balanced housing market. The combination of strong employment, stable wages, and easing interest rates could keep price growth steady into the autumn.
While some volatility may remain, especially if inflation remains sticky, the overall tone from analysts and lenders is positive. Most expect the market to remain active in the coming months, especially if the Bank of England delivers on expected rate cuts.
