UK house price growth below expectations

The UK Nationwide House Price Index rose by 2.1% year-on-year in June 2025, marking a significant slowdown from May’s 3.5% increase and falling short of market expectations, which had forecast a 3.3% gain.

This reading represented the softest annual growth in house prices since July 2024, signaling a clear cooling in the UK housing market. Nationwide’s Chief Economist, Robert Gardner, attributed this moderation largely to weaker demand following the stamp duty increase introduced in April, which appears to have dampened buyer enthusiasm and slowed transaction volumes.

Despite the slowdown, Gardner remained cautiously optimistic, noting that housing market activity is expected to pick up as the summer progresses. This resilience is supported by several fundamental factors underpinning the UK economy.

Unemployment remains low, providing steady income security for households, while earnings continue to rise at a healthy pace in real terms after adjusting for inflation. Additionally, household balance sheets remain robust, giving many potential buyers the financial stability to consider entering the market.

Borrowing costs, which have been a concern amid recent rate hikes, may also ease further if the Bank of England opts to lower the Bank Rate in upcoming quarters, as most market analysts currently anticipate.

On a monthly basis, however, the housing market showed signs of weakness with prices falling 0.8% in June, reversing the 0.4% rise seen in May and defying forecasts that had predicted a modest 0.2% increase. This decline highlights short-term volatility and suggests that sellers may be adjusting expectations amid the changing economic backdrop.

Overall, while the market is currently in a period of consolidation, the underlying economic conditions and supportive factors suggest the potential for a gradual recovery later in the year, provided global economic uncertainties do not escalate further.