House prices rose by 0.6% in July (seasonally adjusted) according to Nationwide. House price growth over the last three months was 0.2%, the first positive recording, albeit marginal, since the Stamp Duty Land Tax (SDLT) changes on 1st April. This boosted annual house price growth in July to 2.4%, up from 2.2% last month. 

To maintain buyer interest, sellers are having to price competitively. Rightmove recently noted that buyers have the most choice in stock in over a decade, so to achieve a sale, sellers are adjusting prices. According to TwentyCI, price adjustments in the three months to July 2025 occurred 21% more than in the three months to July 2024. This is sustaining activity; Zoopla reported an 8% increase in agreed sales compared to last year, defying the usual summer slowdown. First Time Buyers are driving this recovery, taking advantage of lowering rates and their chain-free status to secure sales. With high levels of stock, it is likely to be some time before increased activity translates into substantial price growth.

Following a more cautious H1 2025 than anticipated, we have revised our forecasted UK house price growth down to 1% in 2025. Greater geopolitical uncertainty, in the form of tariffs and trade wars, have knocked consumer confidence, while the SDLT changes on 1st April took much of the momentum out of the market in a subsequent quarter. As a result, we have revised our mainstream forecasts down from 4% in 2025 to 1%. Over the next five years, however we are expecting improved affordability and a strengthening economy from 2027 to boost growth through 2027 to 2029.

Mixed economic signals create challenges for the Monetary Policy Committee ahead of their next meeting on 7th August. These will be forefront of the decision on whether to hold the base rate at 4.25% or cut it. On the one hand, concerns about inflation linger, with CPI rising by 3.6% in the year to June 2025, driven by higher transport costs. Holding the rate, however, could limit the UK’s growth; in May, the economy shrank by -0.1%. Most economists expect a cut of 0.25% in August, followed by one more cut in 2025.

Q1 2025 saw strong activity in the UK Buy-to-Let (BTL) sector, according to UK Finance. The number of BTL mortgages advanced in Q1 2025 was 39% higher than in Q1 2024, with a 47% uplift in value advanced. This was partly fuelled by the SDLT changes coming into effect on 1st April, with landlords making the most of higher thresholds. It is, nonetheless, an encouraging sign of investment ahead of the Renters Rights Bill due to come in at the end of the year, boosting a rental market that has faced chronic stock shortages.

House price data from April shows that the local authorities with the greatest value growth are in Scotland and the North, chiefly North Lanarkshire and Clackmannanshire, which grew by 8.9% and 8.8%, respectively. Regions seeing house price falls are primarily coastal areas, like Aberdeenshire (-4.1%) and Torridge (-3.0%) which have become less popular since the pandemic, or the most expensive areas of London, including Kensington and Chelsea (-3.0%) and Westminster (-2.8%), which have the greatest concentration of buyers that could be spooked by talk of a wealth tax in the Autumn budget.

Annual rental growth across the UK in June was 2.7% according to Zoopla, flat from 2.7% in May. This comes as tenant demand slows, according to RICS surveyors, as is typical at the beginning of summer. 

Rental growth is starting to accelerate in less affordable regions, including London and the South East and West, where rents grew by 1.9%, 3.3% and 3.2% in the year to June 2025 . In these regions, rental growth slowed significantly and there is now some capacity in the market for greater growth. More affordable markets, such as the North East and Wales, are stilling seeing higher rental growth of 4.8% and 3.8%, respectively, but this is slowing.

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