Political uncertainty, higher mortgage rates and a summer dominated by holidays, heatwaves and the World Cup have combined to cool housing market activity, with sellers cutting asking prices more sharply than normal to attract buyers.

The latest Rightmove House Price Index shows the average asking price of a newly listed home fell by 1% (£3,832) in July to £372,359 – a much steeper drop than the 10-year average July decline of 0.2%.

Despite the seasonal slowdown, the number of homes for sale remains close to a 12-year high, leaving buyers with plenty of choice and increasing competition among sellers.

Market activity has also softened, with the number of sales agreed during the first six months of 2026 down 6% on the same period last year, although matching the level recorded in the first half of 2024.

REALISTIC PRICING

Colleen Babcock (main picture, inset), property expert at Rightmove, said: “This month’s larger-than-normal price fall reflects the reality of a market where buyers have plenty of choice and sellers are having to work harder to stand out and attract them.

“They’re also competing with an unusual number of distractions which have been keeping the minds of some potential buyers occupied, namely the World Cup and the hot weather. While these diversions are short-term, they’re adding to what is already a distracting summer holiday period to create a challenging selling environment.”

Rightmove’s research also highlights the importance of realistic pricing from the outset. Almost three-quarters (74%) of homes that have sold this year did so without any reduction in the asking price, while properties that required a price cut spent an average of 127 days on the market compared with just 36 days for homes that sold at their original asking price.

The property portal said buyers remain highly price sensitive despite underlying market fundamentals remaining positive, with lenders continuing to compete for business, wage growth still outpacing house price growth and unemployment remaining low.

POLITICAL UNCERTAINTY

Looking ahead, Rightmove warned that further political uncertainty could weigh on confidence if speculation over housing policy is allowed to continue.

Babcock added: “The first half of 2026 has been more challenging than many predicted, with the unexpected war in Iran contributing to higher mortgage rates and greater uncertainty for buyers. While activity remains below last year’s levels, it’s encouraging that the number of sales being agreed in the first half of the year is in line with 2024.

“Pricing remains critical, and it’s remarkable that nearly three-quarters of homes that have sold so far this year have done so without needing an asking price reduction. A new Prime Minister also presents an opportunity to make housing a renewed priority, with action needed to support affordability, mobility and the delivery of more homes.”

“The mortgage market is still competitive”

Matt Smith, Rightmove’s mortgage expert, said: “Mortgage rates are higher than many buyers would have hoped for at the start of the year, and the increases due to the war in Iran have understandably dented confidence for some. However, lenders remain keen to lend, and the mortgage market is still competitive.

“There is still uncertainty in the market, and recent mortgage cuts could stop in the near future, however we’re not seeing the kind of difficult lending conditions that have caused more challenging markets in the past. If the outlook shifted and we saw reductions in mortgage rates, it would be a welcome boost to confidence and affordability.”

“Distractions are likely to continue for a while yet”

Tomer Aboody, founding director of specialist lender MT Finance, said: “Wall-to-wall sunshine, combined with World Cup fever, are not good for housing market activity and with schools now breaking up for the summer, distractions are likely to continue for a while yet.

“This is having an impact on asking prices, with sellers having to price sensibly in order to attract buyer attention. Buyers are adopting a more cautious approach and are not prepared to pay over-the-odds, particularly when they have so much choice.

“Affordability remains a concern as the Iran War keeps mortgage rates higher for longer. However, lenders are keen to lend and needs-based buyers are taking advantage of higher leveraged deals in order to buy.

“The housing market could do with some encouragement from the new Prime Minister, in the form of lowering stamp duty, which would boost transactions and benefit the wider economy.”