The UK housing market has shown signs of stabilisation following a period of uncertainty earlier in 2025. After a notable dip in house prices during June, the market rebounded in July, with an increase in property values, signaling cautious optimism among both buyers and sellers. However, the market continues to face challenges such as affordability concerns and regional disparities in price growth, which could affect long-term trends.
Recent data from Nationwide revealed that the annual rate of house price growth slowed to 2.1% in June, compared to 3.5% in May, as a result of weaker demand following the increase in stamp duty in April. Despite this slowdown, Nationwide’s Chief Economist, Robert Gardner, has expressed optimism that activity will pick up as the summer progresses, supported by favourable economic conditions such as low unemployment, rising real wages, and strong household balance sheets.
Meanwhile, Halifax reported a 0.4% rise in house prices in July, marking the largest monthly increase in 2025. Although the annual growth rate eased slightly to 2.4%, Halifax attributed the rebound to easing mortgage rates and improving affordability due to rising wages. Despite this positive trend, affordability continues to be a significant concern for many buyers, particularly for those attempting to move up the property ladder.
Regional variations in house prices remain significant. Northern Ireland continues to lead in price growth, with an impressive 9.7% increase, though this is a slowdown from the 13.5% growth recorded earlier in the year. In contrast, East Anglia has seen the weakest performance, with a modest 1.1% rise in house prices. Northern England is outperforming the South, with prices rising by 3.1% compared to the South’s 2.2%.
Looking ahead, forecasts for the remainder of 2025 suggest modest house price growth, with Savills and Rightmove adjusting their predictions to 1-2% growth, down from earlier estimates of 4%. Factors such as the expiration of temporary stamp duty cuts and ongoing affordability challenges are expected to temper the market’s recovery. However, potential reductions in interest rates could provide some support, boosting affordability and providing a degree of stability.
