UK House Prices Rebound with Strongest Monthly Growth of the Year as Affordability Slowly Improves

The UK property market continues to defy downward trends as house prices posted a 0.4 per cent rise in July, according to the latest data from Halifax. This represents the most significant monthly increase since the beginning of the year and exceeded economists’ forecasts, which had pointed to a 0.3 per cent uptick. Year on year, average prices climbed 2.4 per cent to £298,237, though this marks a slight slow-down from the 2.7 per cent recorded in June.

Rival lender Nationwide had reported a slightly higher 0.6 per cent rise for the same period, suggesting a generally resilient market backdrop. The housing sector has stabilised following a rush of completed transactions earlier in the year, as buyers looked to complete ahead of major changes to stamp duty announced by Labour in last October’s budget.

The revised stamp duty thresholds now see the minimum threshold for paying the tax reduced from £250,000 to £125,000 on most purchases. First-time buyers must now pay duty on purchases above £300,000, lowered from the previous £425,000 threshold. The changes have introduced fresh pressures, though with mortgage rates easing and wages on the rise, affordability is gradually improving.

Amanda Bryden, head of mortgages at Halifax, believes the market is on track for a period of modest but steady gains throughout the remainder of the year. Bryden notes that more flexible affordability assessments are supporting activity, with lending and sales volumes both healthy. Data from HMRC recorded a 13.4 per cent leap in residential transactions in June, totalling more than 93,500 sales. Bank of England figures show mortgage approvals up 1.4 per cent to above 64,000 for the same period.

An important development is the approaching end of ultra-low fixed-rate deals for a significant number of homeowners. Those with two-year fixes taken at post-mini budget peaks may soon see their monthly payments fall, while five-year fixers face mixed prospects depending on their household finances. Sharper improvements in affordability are possible after the Bank of England’s recent quarter-point cut to a base rate now sitting at 4 per cent, though stubborn inflation persists.

Regional figures highlight marked differences across the UK. Northern Ireland leads the way with a remarkable 9.3 per cent annual increase to an average price of £213,832. Scotland follows, rising 4.7 per cent to £125,238, and Wales registering a 2.7 per cent gain to £227,928. The North West and Yorkshire and the Humber saw the strongest growth in England, both with increases of 4 per cent. Price appreciation remains subdued in southern England, though London sustains its status as the country’s priciest location at an average of £539,914.