"Challenges remain for those looking to move up or onto the property ladder. But with mortgage rates continuing to ease and wages still rising, the picture on affordability is gradually improving"
- Amanda Bryden - Halifax
UK house prices increased by +0.4% in July, marking the highest monthly rise recorded so far this year, according to the latest figures from Halifax. The average property price now stands at £298,237, up from £297,157 in June.
This monthly gain represents a £1,080 increase in cash terms. On an annual basis, house prices are now +2.4% higher, slightly below June’s yearly growth rate of +2.7%.
"UK house prices rose in July, up by +0.4% (£1,080 in cash terms), the biggest monthly increase since the start of this year,” said Amanda Bryden, head of mortgages at Halifax. “The average house price is now £298,237, +2.4% higher than a year ago.”
While national averages remain close to record levels, Bryden highlighted that regional and property type differences continue to shape the market. “While the national average remains close to a record high, it’s worth remembering that prices vary widely across the country depending on a number of factors, not least location and property type,” she explained.
Affordability pressures remain, particularly for first-time buyers and those moving up the ladder. However, ongoing wage growth and a gradual decline in mortgage rates are contributing to a slightly more favourable environment.
“Challenges remain for those looking to move up or onto the property ladder,” Bryden continued. “But with mortgage rates continuing to ease and wages still rising, the picture on affordability is gradually improving.”
She also noted that more flexible lending criteria have played a role in supporting market resilience. “Combined with the more flexible affordability assessments now in place, the result is a housing market that continues to show resilience, with activity levels holding up well.”
Looking ahead, modest increases in house prices are expected over the coming months. “We expect house prices to follow a steady path of modest gains through the rest of the year,” she added.
Fixed-rate mortgage expiries expected to shape buyer decisions
The second half of the year will see a growing number of homeowners reach the end of fixed-rate mortgage deals secured during the pandemic, a time marked by historically low interest rates and significant house price growth.
“The second half of this year will also see a notable rise in homeowners coming to the end of fixed-rate deals taken out during the pandemic-era property boom; a period marked by ultra-low interest rates and soaring house prices,” said Bryden.
She pointed out that while many borrowers on five-year deals will see higher repayments, those on shorter-term fixed rates may benefit. “While most borrowers coming to the end of five-year fixed-rate mortgage deals will see their monthly repayments rise, the extent of this will vary across households. Those coming off a two year fixed-rate are very likely to see their monthly payments come down, as they originally locked in rates during the peak that followed the 2022 mini-budget,” she explained.
Although this shift is not expected to drive significant price changes, buyer behaviour may be affected. “We’re unlikely to see a significant impact on house prices, but it may influence market dynamics if prospective home movers choose to delay plans as a result of tighter budgets,” she said.
Regional performance: Northern Ireland leads annual growth
Across the UK, Northern Ireland continues to show the strongest property price performance. Average house prices there rose by +9.3% over the past year, reaching £214,832.
Scotland also recorded solid growth, with prices increasing by +4.7% in July. The average property now costs £215,238.
In Wales, prices rose by +2.7%, with the average home valued at £227,928.
Among the English regions, the North West and Yorkshire & the Humber experienced the highest annual increases. Prices rose by +4.0% in both areas, bringing average values to £242,293 and £215,532 respectively.
More moderate growth was seen in the South West, South East and London, with annual changes ranging between +0.2% and +0.5%. London remains the UK’s most expensive region, with an average house price of £539,914.
Industry reaction
Tom Bill, head of UK residential research at Knight Frank, said, “The UK housing market is getting back on its feet following the disruption of April’s stamp duty cliff edge, but high levels of supply are keeping prices in check. We expect low single-digit annual growth by the end of the year but that depends on the content of the autumn Budget."
"Some parts of the economy are already adopting the brace position and buyers could begin to hesitate after the summer if speculation over tax rises persists. The conundrum for the housing market is that the government needs to increase its financial headroom to keep borrowing costs in check but without sentiment-sapping tax hikes.”
Nathan Emerson, CEO of Propertymark, comments, “This is a glimmer of good news for consumers considering it has been reported that there are economic headwinds ahead of us soon, and this news proves that house prices are adapting to recent Stamp Duty changes despite other reports suggesting that housing activity has slowed due to these tax increases.
“Lenders are adapting to market trends by offering more competitive products, however, with the average deposit needed to purchase a home now exceeding £60,000, more support is needed to make homeownership a realistic aspiration for more people. The UK Government and the devolved administrations must prioritise housebuilding to void the gap between supply and demand, which ultimately will help bring down house prices in the long-term, as well as the Bank of England reducing interest rates as soon as possible to further improve affordability.”
Matt Thompson, head of sales at Chestertons, says, “Many house hunters feel that the property market now provides a window of opportunity as more properties are up for sale. Last month, some of our branches registered 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 cut interest rates today, we expect more buyers to proceed with their property search over the coming weeks.”
