Annual UK house price growth increased modestly to 2.4% in July, up from 2.1% in June, according to Nationwide.
Monthly growth stood at 0.6% on a seasonally adjusted basis, with the average UK house price rising to £272,664.
The house price to earnings ratio has fallen to approximately 5.75, its lowest level in over 10 years.
Nationwide’s chief economist, Robert Gardner, said: “July saw a modest pick-up in the rate of annual house price growth to 2.4%, from 2.1% in June. Prices increased by 0.6% month on month, after taking account of seasonal effects.
“Looking through the volatility generated by the end of the stamp duty holiday, activity appears to be holding up well. Indeed, 64,200 mortgages for house purchase were approved in June, broadly in line with the pre-pandemic average, despite the changed interest rate environment.”
Gardner said the improvement in housing affordability has been driven by strong income growth, subdued house price inflation, and a modest fall in mortgage rates.
“While the price of a typical UK home is around 5.75 times average income, this ratio is well below the all-time high of 6.9 recorded in 2022 and is currently the lowest this ratio has been for over a decade.
“This is helping to ease deposit constraints for potential buyers, as has an improvement in the availability of higher loan-to-value mortgages,” he said.
He added: “Similarly, the interest rate on a typical five-year fixed-rate mortgage is around 4.3% (for a borrower with a 25% deposit).
“This is still over three times the all-time lows prevailing in autumn 2021, but well below the highs of c5.7% reached in late 2023.”
Nathan Emerson, CEO at Propertymark, said: “This shows that the UK’s housing market remains stable at a time when numerous domestic and international factors are impacting the wider economy.
“With continued talk of a gradual easing of interest rates, even while inflation remains above the Bank of England’s targeted rate of 2%, it is vital that this results in more affordable mortgage products for aspiring buyers and home movers.
“Many people are delaying paying off their mortgages until later in life via 35-year or 40-year mortgages.
“Therefore, a reduction in interest rates would be very welcome to help offset ongoing financial pressures and worries over the cost of living for many.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Lower mortgage rates, with the expectation of more reductions to come, are giving the market impetus and putting borrowers in a stronger position when it comes to negotiating their property purchase. This, in turn, is keeping prices in check.
“With the markets expecting a further rate reduction next week, we could be in for a busy autumn.
“Lenders continue to trim their mortgage rates, while easing of mortgage lending rules should also enable borrowers to take on bigger mortgages in coming months.”
Further reaction
Karen Noye, mortgage expert at Quilter:
“The latest data from Nationwide shows that despite the usual summer lull, the housing market remains resilient as house prices rose 0.6% in July, bringing annual growth to 2.4%. Following a 0.9% decline in June, this is a strong bounce back as the market continues to adjust to the stamp duty reforms earlier in the year.
“Activity remains strong, with yesterday’s monthly property transaction data highlighting a 13% month-on-month growth in sales, with the 93,530 transactions being 1% higher than the same point last year. While the backdrop remains uncertain, it is at least supportive for homebuyers.
“All eyes will be on the Bank of England next week and what it decides to do with interest rates. It was thought that a rate cut was fairly certain on Thursday, but recent inflation data coming in higher than expected may just temper things slightly and force buyers to wait. Should the Bank of England follow through with a rate cut, however, that will help support the buyers.
“We have also witnessed the launch of the mortgage guarantee scheme earlier this month. While it remains early days to assess the impact of this scheme, it should help first time buyers with affordability at a time when upfront costs such as stamp duty have risen. The government is on something of a deregulation agenda currently, so the housing market and schemes such as this will be watched closely to see what impact is being had.
“While the economic picture in the UK isn’t the healthiest, it is at least stable, and this will ultimately keep house buying demand up. If the Bank of England can bring about another two interest rate cuts this year and bring the base rate below 4%, that will send a huge confidence boost through the housing market.”
Marc von Grundherr, director of Benham and Reeves:
“The monthly rate of house price growth has been unpredictable of late, however, July saw the decline of the previous month reversed and we continue to see a consistently strong performance where the annual rate of growth is concerned – which is a far better indicator of the health of the market.
“This overarching air of positivity has been driven by buyers returning with confidence and, since March of last year, we’ve seen mortgage approvals remain above the 60,000 threshold. With this figure having also increased over the last two months, we can expect continued stability in house prices for the remainder of the year, as more buyers look to make their move.”
Verona Frankish, CEO of Yopa:
“July was a wholly positive month for the market, with house prices seeing positive movement both on a monthly and annual basis.
“Recent improvements in mortgage market affordability, including the move to increase income lending multiples and the decision to launch a permanent Mortgage Guarantee Scheme, should help ensure that buyer activity remains consistent and house prices continue to strengthen.
“However, it’s important to remember that the homebuying process remains challenging for many, and while market sentiment is positive, sellers must remain realistic when pricing for current market conditions if they wish to secure a sale.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts:
“Nationwide reports what we have also found in our offices – that the property market isn’t slowing down for summer. While we braced ourselves for a long, quiet stretch until September when the schools return from their summer break, we’re already back in full swing: valuing good houses, agreeing off-market sales, and running packed diaries of viewings.
“The general sentiment is that interest rates will come down, and the Spring market, which never really got going, thanks to uncertainty surrounding President Trump’s tariffs, has left a degree of pent-up demand. There isn’t a huge sense of urgency, and it isn’t a seller’s market, but it is a market.
“Buyers are pragmatic about what they want and what they’ll pay. If a property is priced correctly and meets the right needs, the buyer will be there – and this is playing out across all price brackets.”
