UK house prices recorded their fastest annual growth in more than a year in June while rental inflation showed tentative signs of easing, according to official data.
Figures from the Office for National Statistics show the average UK house price rose 3.7% in the 12 months to June to £269,000, up from 2.7% in May.
It marks the sharpest annual increase since early 2023 as expectations of interest rate cuts and stronger buyer demand supported the market.
Scotland led the way, with prices up 5.9% to an average of £192,000. In England, values rose 3.3% to £291,000, while Wales saw a more modest 2.6% increase to £210,000.
Analysts said the figures suggested resilience in the housing market despite high borrowing costs.
“Price growth is starting to reassert itself as buyers anticipate lower mortgage rates ahead,” one economist said, adding that the market could strengthen further if the Bank of England moves towards monetary easing later this year.
RENTAL MARKET
Rental growth, however, remained stronger than house prices but showed signs of slowing.
Average monthly private rents increased by 5.9% in the year to July, down from 6.7% in June. That took the average rent to £1,343, close to record levels but the lowest annual rate of growth since early 2023.
Across the UK, rents rose fastest in Wales, up 7.9% to £807, followed by Northern Ireland at £855, up 7.4%. In England, the average monthly rent rose 6% to £1,398, while Scotland recorded a 3.6% rise to £999. Within England, the North East saw the strongest growth at 8.9%, while Yorkshire and the Humber recorded the weakest at 3.5%.
Economists said that while rental inflation remains elevated, affordability pressures could now be beginning to slow momentum in the lettings market.
FIRST-TIME BUYER HELP
Richard Donnell, Executive Director at Zoopla, said: “Improved access to mortgages is helping first time buyers buy homes and easing the demand for rented homes alongside lower levels of migration.
“Rental growth is slowing and set to move lower over the rest of the year as affordability acts as a growing brake on rental growth. House prices inflation is volatile on the ONS measure but remains below the growth in average earnings which is helping to slowly improve affordability.”
INDUSTRY REACTION
Colin Bell, COO and Co-Founder of Perenna, said: “While it’s good to see rent increases slowing, the fact remains that rents are still rising.
“We’re unlikely to reach a point where rents decline any time soon, and on top of that house prices are still rising.
“With higher rent costs, how are consumers ever going to get out of the vicious cycle in which they’re forced to pay high rents and face no real opportunity to get onto the housing ladder, blocked by the ever-growing prices, difficulty in saving a large enough deposit and stretched affordability when it comes to applying for a mortgage?
“The market desperately needs innovation.”
“The market desperately needs innovation, from both Government and the private sector. We are seeing some thought go into solving this problem with announcements that the Government is looking into reforming stamp duty, but we have to change the way the market is set up at its very core if we’re going to address affordability, and move to a more long-term mindset.
“Only then will we get people out of a renting cycle and onto purchasing a potentially appreciating asset that they own.”
PLENTY OF LIQUIDITY
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With inflation ticking up in July, the next rate reduction from the Bank of England may come later rather than sooner, which will come as a disappointment to borrowers.
“As the Committee was already split as to whether it should reduce rates at the August meeting, September may be too soon for another base rate cut.
“Easing of mortgage criteria by lenders continues with borrowers in theory able to take on bigger mortgages and afford the houses they desire. Lenders have plenty of liquidity and are keen to lend with mortgage rates fairly steady on the whole, although some lenders continue to tweak rates downwards.”
POSITIVE MOMENTUM
Jonathan Samuels, CEO of Octane Capital, said: “Today’s figures demonstrate that the housing market is in a healthier position than many expected, with prices climbing at both a monthly and annual level.
“A key driver behind this stability has been the mortgage sector, where approvals have now increased for two consecutive months and are fueling current momentum.
“This renewed activity in lending is helping to underpin demand and stimulate the wider market, providing the liquidity that buyers need to proceed with confidence.
“With the mortgage market continuing to support transactions, we expect to see further positive momentum in house prices over the coming months.”
OPPORTUNITY KNOCKS
Kevin Roberts, managing director, mortgage services, L&G, said: “The housing market remains buoyant with easing lending conditions and the base rate cut giving first-time buyers renewed confidence to get onto the property ladder.
“In fact, our Ignite data shows that first-time buyers accounted for 60% of mortgage searches in the first quarter of the year.
“There’s a diverse range of properties and opportunities for buyers, although conditions vary across the country, with northern regions generally performing strongly and many local markets remaining stable or rising, demonstrating the underlying health of the market.”
REDUCE STAMP DUTY
Tomer Aboody, director of specialist lender MT Finance, said: “With lower interest rates, buyers are more confident in moving, which in turn has brought about an increase in pricing.
“This isn’t the biggest factor in the price rises though. Looking at transactional levels in April 2024 compared with April 2025, there’s been a huge 60% drop in activity in England.
“This further indicates that although rates are lower and encouraging people to act, something must be done to reduce stamp duty and allow the market to really start to flow again, which in turn will strengthen the wider economy.”
POSITIVE SIGN
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Continued moderation of private rental growth is a positive sign but monthly payments remain at a level that will stretch many tenants.
“This is because rent inflation has swelled significantly from 1.0% in the first quarter of 2021 to a record high of 9.0% seen at the end of 2024. This correlates with increased demand seen since the pandemic.
“It is crucial then that supply matches demand.”
“It is crucial then that supply matches demand, something that will persist, fuelled by a range of factors including more people living alone or entering higher education, in addition to projected population growth, more broadly.
“In order to increase PRS stock and slow rent inflation, investment must be financially viable and protected by balanced regulation that considers landlords’ interests as well as tenant rights.
“Lenders and our industry partners can help by providing a range of finance products to meet landlord needs, but policymakers also have an important part to play if we’re to see a fair and functioning PRS.”
FOCUS ON FAIRNESS
Chris Storey, chief commercial officer, Atom bank, said: “House prices are continuing to bounce back from the temporary lull that followed the end of the stamp duty holiday, though the rate of growth is far more modest than at the start of the year.
“The most recent data from Rightmove shows that asking prices have dropped of late, with the number of properties for sale jumping by 10% on the same period of last year.
“This competition is pushing sellers to be realistic with their pricing, opening the door for a deal to be done. It’s translating into higher activity levels, with the number of agreed sales up by 8% compared with this time last year, while lower mortgage rates are playing their part too.
“Moneyfacts analysis shows that average 2-year fixed rates have dropped to below the average rates available on five-year terms, for the first time since September 2022, suggesting we are finally putting the effects of the notorious mini-Budget behind us.
“The combination of wider property choice and lower mortgage rates will help make some buyers make the jump onto or up the housing ladder.”
“However, a cohort of would-be buyers are being left behind. Analysis of historic first-time buyer data by the BSA suggested that since 2006 around 2.2 million first-time buyers have failed to purchase their first home.
“These buyers are being handicapped by too few options for small deposits, overly prescriptive lending limits and a blinkered approach to historic credit issues. As an industry we need to not just focus on house price fluctuations, but on fairness too.”
AFFORDABILITY STRUGGLES
Thomas Lambert, financial planner at Quilter, said: “Today’s UK house price index for June 2025 shows that prices rose by 3.7% on an annual basis, bringing the average property price to £269,000.
“This headline figure sits against a market still struggling with affordability. Mortgage rates have eased from the highs, but typical fixes remain around the 4% mark, which keeps monthly payments far above the levels buyers grew used to in the 2010s.
“This morning’s inflation print ticked up again, which makes the path to lower interest rates longer and reinforces the affordability squeeze. On top of that, housing supply remains thin which keeps choice limited for buyers and keeps prices sticky.
“Policy noise is adding further uncertainty.”
“Policy noise is adding further uncertainty. Reports this week suggest the Treasury is considering taxing gains on primary residences above a high threshold or introducing new levies on expensive homes.
“If these rumours do materialise at the Autumn Budget brings, transactions could seize up through the winter as sellers consider sitting on their hands hoping that another government might reverse the changes. That would risk even tighter supply and, paradoxically, could push prices higher by intensifying competition, compounding problems for first-time buyers.
“Labour making the Mortgage Guarantee Scheme permanent helps at the margin, but it does not create homes or meaningfully lower borrowing costs. Without more supply and a clearer path on rates and taxation, the housing market could face a winter of discontent that drags into next year with even more people shut out.”
PORTFOLIO PLANNING ESSENTIAL
Alex Upton, managing director, specialist mortgages and bridging finance, Hampshire Trust Bank, said: “Rents are still edging upwards, but there are signs that tenant demand has eased slightly over the summer.
“Propertymark’s latest Housing Insight report shows new tenant registrations in June fell to their lowest level in years and the supply-demand imbalance has softened. There are now six applicants per property on average, compared to nearly ten at points last year.
“Even so, a modest slowdown doesn’t change the underlying picture. We are still significantly short of the rental stock needed to meet demand and that structural gap will keep upward pressure on rents for the foreseeable future.
“The long-term fundamentals haven’t shifted.”
“That’s the key message for brokers and landlords. While the market may be adjusting at the margins, the long-term fundamentals haven’t shifted. Professional landlords will continue to invest in quality assets, and strategic portfolio planning remains essential.
“Securing the right funding and preparing for future regulation will be critical in navigating what comes next.
“Over time, it’s also vital that we focus on the right kind of supply. A resilient rental market depends not just on volume, but on quality, accessibility and long-term affordability. Achieving that requires joined-up thinking, targeted investment and policy that supports both tenants and landlords.”
POSITIVE OUTLOOK
Tony Hall, head of business development at Saffron for Intermediaries, said: “Today’s figures show renewed momentum in the housing market, with steady price growth supported by increased buyer confidence and a wider choice of mortgage products. Recent criteria changes from lenders are giving borrowers greater flexibility, which is helping many to move ahead with plans they may have paused earlier in the year.
“A higher number of homes on the market is also sustaining activity and preventing sharp rises in affordability pressures.
“Earlier this month, the Bank of England reduced the base rate to 4% – the lowest level since March 2023 – and this move is expected to provide further support to affordability in the months ahead. As we move into the second half of the year, these factors point to a positive outlook for buyers and brokers alike.”
DECISIVE ACTION
Maria Harris, Chair at Open Property Data Association, says: “These rising prices reflect the ongoing affordability pressures households are facing, particularly in regions where growth is most pronounced such as the North East.
“While increased values may benefit existing homeowners, first-time buyers and lower-income households are likely being squeezed out further amid constrained supply and persistent uncertainty over housing policy delivery.
“We urge policymakers and industry stakeholders to respond to these insights with decisive action; expanding housing supply through an easier homebuying and selling process, and to support consumers in their ability to confidently enter into a property transaction.
“Only with a more holistic, cohesive, and smart data-informed approach can we hope to stabilise housing outcomes across the UK.”
