Average UK house prices rose by 2.8% in the year to July 2025, reaching £270,000, according to the latest official data, though the pace of growth eased from 3.6% in June. On a monthly basis, prices inched up by 0.3%.
Across the nations, average prices increased to £292,000 in England (up 2.7%), £209,000 in Wales (2.0%) and £192,000 in Scotland (3.3%).
The figures from the Office for National Statistics suggest the housing market is holding steady, but with growth constrained by mortgage costs and affordability pressures.
STABLE BUT WEIGHED DOWN
Karen Noye, mortgage expert at Quilter, said: “The latest figures point to a housing market that is stable but still weighed down by affordability pressures.
“The wider economic backdrop remains a crucial factor. Inflation stuck at 3.8% in August, making the Bank of England’s job more difficult.
“While markets had been anticipating rate cuts before the end of the year, today’s data will reinforce the case for the Bank to tread cautiously. Interest rates staying higher for longer would keep mortgage costs elevated, tempering buyer demand and limiting the scope for a sustained rebound in prices.”
And Clare Beardmore, director of distribution and mortgage club, Mortgage Services, L&G, added: “Positive sentiment in the housing market, boosted by an influx of mortgage products, is helping drive buyer demand and creating opportunities for brokers to deliver valuable advice.”
RISING RENTS
The ONS also reported that private rents across the UK rose by 5.7% in the year to August 2025, taking the average monthly rent to £1,348. Annual rental inflation eased slightly from 5.9% in July, but remains near record highs.
Rents increased to £1,403 in England (up 5.8%), £811 in Wales (7.8%) and £1,002 in Scotland (3.5%). In Northern Ireland, the average monthly rent climbed to £860, a 7.2% rise in the year to June. Within England, the North East recorded the strongest rental inflation at 9.2%, while Yorkshire and the Humber saw the lowest at 3.4%.
INDUSTRY REACTION
Richard Donnell, executive director at Zoopla, said: “Rents and house prices are slowing across the UK as housing demand cools and affordability pressures bite on what people can pay for rent and mortgages.
“This has big implications for home building where weaker demand is holding back investment in growing supply.
“The government needs to either support demand or remove the impediments to getting more home built.”
NOT ENOUGH HOMES
Chris Storey, chief commercial officer at Atom bank, said: “These ONS figures follow data from Halifax, which suggest yet another record high, and highlight the scale of the task facing Steve Reed, the new Housing Secretary.
“We don’t have enough homes, we don’t build enough new ones to meet demand, and house prices just keep rising.
“Addressing the imbalance has to be at the top of the to-do list for the new Housing Secretary, particularly given the mediocre rates of housebuilding this year. Pledges and targets are all well and good, but they don’t mean much to the aspiring buyers watching house price growth push homeownership out of reach.
“There’s also the small matter of the Budget on the horizon.”
“There’s also the small matter of the Budget on the horizon, with continued speculation about a complete overhaul of property taxes, including the scrapping of stamp duty.
“We saw earlier this year the impact the stamp duty regime has on transaction levels, as buyers rushed to beat the holiday deadline, driving up prices sharply in the process.
“While making things easier for first-time buyers would be welcome, there is a balance to be found so that it does not end up pushing prices up to even less affordable levels.”
AFFORDABILITY IS KEY
Steve Griffiths, commercial director for retail mortgages at Shawbrook, said: “House prices continued to edge upwards in July, bucking the usual seasonal dip as prospective buyers balanced their property search with time in the sun.
“This could be motivated by several moves from lenders, including relaxations on criteria and competitive mortgage deals – particularly those targeted at first-time buyers – despite what remains a buyer’s market overall.
“There are signs that further Government support is on the way.”
“Looking ahead, there are positive signs that further Government support is on the way to get people on the housing ladder, starting with the new £39 billion Social and Affordable Homes Programme.
“Affordability is the key issue going forward, and should be prioritised in the Autumn Budget – whether that’s support for renters so they can put more away for a deposit, or buyers so they can put an offer down sooner. For those looking to buy, it’s important to speak to a broker to understand how best to make use of the current market for their specific property goals.”
TRANSACTIONS STUNTED
Tomer Aboody, director of specialist lender MT Finance, said: “Lower interest rates give buyers more confidence in moving, which in turn has brought about an increase in pricing.
“However, despite cheaper rates, transactional levels remain stunted.
“This further underlines the case for taking action to reduce or reform stamp duty in order for allow the market to really start to flow again, which in turn will strengthen the wider economy.”
RATE INCREASE
Lee Williams, national sales manager at Saffron for Intermediaries, said: “Today’s figures show a continued momentum in the market, with steady price growth supported by the Bank of England’s base rate cut last month.
“This has helped boost buyer confidence and expand mortgage options. While reports suggest Rachel Reeves may replace stamp duty and council tax with an annual property tax, this has not yet significantly impacted the market.
“This month saw new leadership as a new Housing Minister was appointed, issuing a ‘call to arms’ to ‘build, baby, build’. The industry will be looking for tangible measures to help meet the government’s 1.5 million home target.
“With the Budget set for late November, lenders are gradually increasing mortgage rates, prompting some buyers to act quickly.”
LENDERS ARE LIQUID
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “With inflation holding steady in July, could it have finally peaked?
“The rate setters at the Bank of England may decide to monitor the situation a little longer before committing to the next rate reduction, with tomorrow’s meeting perhaps coming too soon for another cut.
“Further rate reductions are expected in due course but the Bank may want to see evidence that inflation is better under control before committing.
“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 are tweaking rates upwards.”
SUPPLY DEMAND MISMATCH
Russell Anderson, commercial director of Mortgages at Paragon Bank, said: “Historically, rent inflation has broadly correlated with wage inflation. The mismatch between the supply of and demand for privately rented homes in recent years has seen rents outpace wages, placing financial pressure on tenants.
“Positively, buy-to-let mortgages rates have lowered more recently, which should help improve affordability and, ultimately, supply. While the cost of borrowing is a key determinant of buy-to-let investment, the regulatory environment is also an important consideration for landlords. It is therefore vital that their investments are protected with regulation that balances their rights with those of renters.”
PIVOTAL MOMENT
Alex Upton, managing director – specialist mortgages and bridging finance, Hampshire Trust Bank, said: “Balancing the rental market must be a top priority for Steve Reed as he steps into the role of Housing Secretary.
“The latest Propertymark data shows tenant demand rising sharply, far outpacing any increase in available rental stock. That imbalance is keeping rents under pressure, and until we see meaningful progress on supply, any short-term easing is likely to be temporary.
“A big part of what happens next will hinge on the Renters’ Rights Bill. The timing and detail are still to be confirmed, but the direction of travel is clear. Landlords are already adapting, upgrading properties, restructuring portfolios, and making long-term decisions about where they want to be.
“The broker’s role has never been more important.”
“This is a pivotal moment for brokers. Professional landlords who see the long-term value in property will need funding partners who understand the landscape and can help them reposition with confidence. That means clear criteria, open communication, and structured lending solutions that reflect the realities of the market.
“The broker’s role has never been more important. By staying close to lender appetite, structuring the right deals, and supporting landlords through change, brokers can be the trusted partner every investor needs. Those who lean in now will be the ones shaping what comes next.”
