Asking prices for newly-listed homes have fallen by 1.0% (£3,832) this month to £372,359, a much larger drop than the average July fall of 0.2% over the past decade, according to newly released data from Rightmove.
Sellers are having to work harder to attract summer buyers who face an unusual number of distractions, from the World Cup and a hot summer to ongoing political change.
The number of available homes for sale sits 1% below this time last year, but remains close to a 12-year high for the time of year. That high supply means buyers have plenty of choice, putting pressure on sellers to price competitively from the outset.
Home-movers are typically distracted by the summer holiday season, but this year the World Cup and unusually warm weather have added to the effect. Rightmove analysis found that the first heatwave in May caused an 8% temporary dip in buyer demand before it rebounded, while June's heatwave produced a similar 6% decline. The current July heatwave has brought a smaller, 4% dip.
"This month's larger-than-normal price fall reflects the reality of a market where buyers have plenty of choice and sellers are having to work harder to stand out and attract them," said Colleen Babcock, property expert at Rightmove.
"They're also competing with an unusual number of distractions, which have been keeping the minds of some potential buyers occupied, namely the World Cup and the hot weather. While these diversions are short-term, they're adding to what is already a distracting summer holiday period to create a challenging selling environment."
Despite market challenges, fundamentals remain sound
The first half of 2026 has brought its share of challenges for the housing market. An encouragingly active start gave way to fresh uncertainty when the unexpected war in Iran pushed already elevated mortgage rates higher. Sales agreed in the first half of the year were 6% lower than the same period in 2025, though they remained level with the first half of 2024, suggesting many buyers are still willing to move if the property and price meet their needs.
Getting the initial asking price right matters more than ever in the current market. New Rightmove analysis shows that nearly three-quarters (74%) of homes that sold and completed this year did so without needing an asking price reduction.
Homes that did require a reduction spent an average of 127 days on the market, compared with just 36 days for those that sold without one. The figures suggest that the most successful sellers are those who price competitively from day one, rather than testing the market at an optimistic figure and reducing it later.
The average two-year fixed mortgage rate now stands at 4.92%, up from 4.25% in February before the war in Iran began, though it has eased slightly from 5.07% last month. Several factors continue to support the market:
- Lenders are competing strongly to lend
- Wages are still rising faster than house prices, helping affordability
- Unemployment remains low
These fundamentals leave room for optimism in the second half of the year, particularly if mortgage rates fall further and wage growth continues to outpace house prices.
New Prime Minister adds uncertainty, but offers a chance to reset
Political change has added a further layer of uncertainty to a market already contending with summer distractions.
Rightmove is urging the incoming Prime Minister to make housing a priority, with reforming stamp duty to improve mobility and affordability in the areas it says need urgent attention. The housebuilding industry also needs support in reaching its 1.5 million homes target; Rightmove's data shows the number of new developments coming to market is at its lowest level since January 2017.
Prolonged uncertainty caused by policy rumours and speculation would be unhelpful for the market, Rightmove warns. Speculation has already circulated about a potential Land Value Tax replacing stamp duty and council tax, and without clear details or deadlines, some home-movers may hesitate for fear of missing out.
"The first half of 2026 has been more challenging than many predicted, with the unexpected war in Iran contributing to higher mortgage rates and greater uncertainty for buyers," Babcock added.
"While activity remains below last year's levels, it's encouraging that the number of sales being agreed in the first half of the year is in line with 2024. Pricing remains critical, and it's remarkable that nearly three-quarters of homes that have sold so far this year have done so without needing an asking price reduction.
"A new Prime Minister also presents an opportunity to make housing a renewed priority, with action needed to support affordability, mobility and the delivery of more homes."
Matt Smith, Rightmove's mortgage expert, offered a similar assessment of the mortgage market. "Mortgage rates are higher than many buyers would have hoped for at the start of the year, and the increases due to the war in Iran have understandably dented confidence for some," he said.
"However, lenders remain keen to lend, and the mortgage market is still competitive. There is still uncertainty in the market, and recent mortgage cuts could stop in the near future; however, we're not seeing the kind of difficult lending conditions that have caused more challenging markets in the past. If the outlook shifted and we saw reductions in mortgage rates, it would be a welcome boost to confidence and affordability."
Chris Thomas, managing director at Wiglesworth & Co. Estate Agents in Leamington Spa, Warwickshire, said the market has held up reasonably well given the circumstances. "The market is certainly more challenging than at this time last year.
"However, in saying that, given the increases to mortgage rates we've seen in the first half of this year due to the war in Iran, I think the market has actually held up better than many expected," he explained.
"In the type of market we're in currently, there are some clear rules that sellers need to follow to successfully find a buyer.
"Firstly, accuracy of pricing is everything and getting the price right the first time gives sellers the best chance. Secondly, sellers need to choose an agent who knows the local area and market extremely well and has a proven strong track record of giving honest and professional advice.
"There are still buyers active in the market, and positive signs that mortgage rates could be easing. If sellers stick to these principles, they have a good chance of being successful."
