Annual UK house price growth eased to 1.8% in July as economic uncertainty and higher mortgage costs continued to restrain the market, Nationwide has reported.
The building society’s house price index showed that annual growth slowed from 2.2% in June, while prices increased by 0.1% month on month after seasonal adjustments.
The average UK property price was £277,542, compared with £277,484 in June.
Robert Gardner, chief economist at Nationwide, said: “UK annual house price growth edged down to 1.8% in July, from 2.2% the previous month. Prices remained broadly flat in month-on-month terms, after taking account of seasonal factors.
“Market activity and house prices have remained soft in recent months, in part reflecting the uncertain economic backdrop. Geopolitical tensions remain high, with the conflict between Iran and the US again exerting upward pressure on energy prices and market interest rates in recent weeks.
“Financial market expectations for the future path of Bank Rate have been volatile, reflecting shifting views about the inflationary implications of events at home and abroad.
“Despite the ongoing risks from the latest energy price shock, the Monetary Policy Committee can take some comfort from the fact that consumer price inflation declined further in June. Signs that wage growth has continued to ease gives policymakers more breathing space to assess the extent to which tighter policy is necessary to ensure inflation returns to target.”
Nationwide’s analysis also showed that people remain in their homes for an average of 14 years. The figure rises to 24 years among outright owners but falls to five years for households in the private rented sector.
Three quarters of residential moves during 2024-25 were within the same tenure, indicating that most movers remained either owners or renters rather than switching between the two.
SELLERS FACE PRESSURE
Estate agents said buyers retained the upper hand in negotiations, although many owners were unwilling to accept substantial reductions.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: “In our offices, prices remain flat with sensible offers being accepted. There are more sellers than buyers, but sellers aren’t panicking – asking prices are coming down, but a lot of that is simply initial overpricing meeting the time it takes to find the market level.
“There’s definitely a point where owners simply won’t move at today’s numbers, and we’re seeing that more and more. It’s like a game of chicken – who moves first, the buyer or the seller?”
Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “After the pick-up in prices last month, it’s interesting but not surprising to note the trend has not been sustained. Buyer power remains so sellers are increasingly obliged to soften prices if they want to maintain transactions.
“This survey has proved to be a particularly accurate long-term identifier of market health as it is linked to customer mortgage offers and recorded on approval.
“The main issue for us now is generating sufficient commitment and momentum while so much uncertainty remains about the likely path of mortgage rates and inflation, partly prompted by the unexpectedly protracted Iran war.
“Looking forward, our offices have recorded a significant uptick in valuation appraisals and buyer registrations so we are anticipating a busy up post-summer holiday period.”
MORTGAGE COSTS REMAIN A CONSTRAINT
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Flat monthly house prices suggest those who are transacting are not willing or able to pay over-the-odds but are taking advantage of this buyers’ market and negotiating accordingly.
“Although some lenders have increased their mortgage rates in recent days, the Bank of England’s steady approach to interest rates, keeping base rate at 3.75% this year, should instill some calm after a period of considerable volatility.
“Borrowers are taking nothing for granted though as the continued high cost of living strains affordability. Many are taking the sensible approach of securing mortgage rates several months in advance of when they need them for peace of mind.”
Ian Futcher, financial planner at Quilter, said: “According to Nationwide, house prices rose by just 0.1% in July, while annual growth slowed to 1.8% from 2.2% previously, bringing the average property price to £277,542.
“This relatively subdued snapshot of the housing market shows activity is far from booming. The latest Bank of England money and credit statistics showed net mortgage approvals rose slightly to 58,200 in June but remained below the average of the previous six month period.
“Affordability continues to be a significant challenge, particularly as mortgage rates have drifted higher in recent weeks amid renewed tensions in the Middle East, which is keeping many prospective buyers sat waiting on the sidelines.
“For now, the housing market remains in a holding pattern. Any meaningful shift in house prices will depend on how inflation, interest rates and consumer confidence evolve over the coming months, alongside whether mortgage affordability begins to improve.”
