UK house prices rose by 0.6% in July, even as thousands of homeowners saw an average £1,800 dip in property values, according to the latest Nationwide House Price Index. Annual price growth also strengthened modestly, climbing to 2.4% from 2.1% in June.
While the housing market shows signs of resilience, experts warn that affordability remains a significant hurdle for buyers. Falling mortgage rates and easing lending rules are offering some relief, but regional variations and stamp duty costs continue to weigh on household budgets.
Resilient Market Conditions Despite Cost Pressures
The Nationwide data reveals a mixed picture. Prices increased 0.6% month on month, reversing June’s 0.9% decline, yet the average price still slipped from £273,427 to £271,619 – a £1,800 fall. According to Robert Gardner, Nationwide’s Chief Economist, “the softening in price growth may reflect weaker demand following the increase in stamp duty at the start of April.”
Despite this, underlying market fundamentals remain stable. Unemployment rates are low, earnings are growing in real terms and borrowing costs are expected to ease further if the Bank of England reduces interest rates in the coming months. This combination, according to Nationwide, supports continued demand, even in the face of ongoing global economic uncertainty.
Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, added that improved buyer sentiment in July was partly due to a “steady decline in mortgage rates,” which have fallen following four consecutive interest rate cuts since last year.
Affordability Hurdles and Emerging Lending Trends
Affordability remains one of the market’s most pressing challenges. Inflationary pressures and the reintroduction of lower stamp duty thresholds have reduced purchasing power, especially for first-time buyers. According to Haine, “Higher stamp duty costs can also be prohibitive, particularly for first-time buyers who must save a large deposit and cover a heavier property tax liability.”
In response, lenders are introducing solutions to ease the strain on buyers. Relaxed affordability rules and the expansion of low-deposit or even 100% mortgages have gained traction. Longer-term mortgage deals, stretching repayment periods from 30 to 40 years, are also growing in popularity as households look for ways to reduce monthly costs.
Mortgage approval data for June showed robust activity, suggesting that while some buyers are cautious, many are pressing ahead with their plans. Haine noted that “ today’s home loan rates will be far more attractive than during the peak of the post-pandemic mortgage crisis when average two- and five-year fixes soared past the 6% mark.”
