UK house prices rise at a slower pace

The Halifax House Price Index showed UK property prices rising by 2.5% year-on-year in June 2025, marking the slowest annual growth in eleven months and easing slightly from an upwardly revised 2.6% increase in May.

On a monthly basis, house prices were flat following a 0.3% decline in May, also revised higher. The average UK property price now stands at £296,665, marginally down from £296,782 in the previous month, suggesting that the housing market is stabilising after a period of moderate volatility earlier in the year.

The slowdown in annual growth reflects a market that is gradually recalibrating following a temporary dip in activity tied to the spring stamp duty changes, which had briefly dampened buyer sentiment. However, recent months have seen a rebound in both mortgage approvals and property transactions, indicating renewed buyer confidence.

“After a brief slowdown following the spring stamp duty changes, mortgage approvals and property transactions have both picked up, with more buyers returning to the market,” noted Amanda Bryden, Head of Mortgages at Halifax.

She added that improving affordability conditions are helping underpin demand. “That’s being helped by a few key factors: wages are still rising, which is easing some of the pressure on affordability, and interest rates have stabilised in recent months, giving people more confidence to plan ahead,” Bryden said.

Financial markets are now pricing in two additional rate cuts from the Bank of England before the end of the year, as inflation remains close to the 2% target and economic growth continues to be subdued. This dovish outlook has pushed the average rate on newly drawn mortgages to its lowest level since 2023, further supporting buyer activity, particularly among first-time purchasers and those looking to upsize.

Looking ahead, housing market analysts generally expect modest price growth in the second half of 2025, supported by improving financing conditions and steady wage gains. However, regional disparities remain, with stronger activity observed in parts of northern England and Scotland, while London and the South East continue to experience softer trends amid stretched affordability and slower turnover.

Uncertainty around global trade developments and domestic fiscal policy could also influence buyer sentiment in the coming months, though the market appears to be entering a more balanced phase following the turbulence of recent years.