UK housing market struggles as price growth slows significantly

The UK housing market has seen notable shifts over the first half of 2025 following changes to stamp duty that took effect in April. As the market adjusted, the annual rate of house price growth experienced a significant decline from 3.5% in May to 2.1% in June. Key data indicates that while the number of sales agreed has risen by 8% compared to the previous year and is the highest since 2020, the asking prices have seen a dip. Specifically, the average asking prices dropped by 0.8% month-on-month in June. Colleen Babcock from Rightmove indicated that despite the cooling of prices, the first half of the year has been promising for both buyers and sellers, evidenced by an uptick in market activity. A crucial factor contributing to buyer confidence has been the lower mortgage interest rates currently available compared to last year and the cuts in the Bank Rate that have provided optimism for potential further reductions in mortgage rates. Even after the stamp duty deadline, there remains an increase in sales and a growing number of buyers entering the market, which sets a positive outlook for future transactions as interest rates possibly decrease further. Regional variances have also been observed, with Northern Ireland showcasing the most substantial growth, reporting a 9.7% annual increase. The dynamics in the housing market reflect variability, with areas like London experiencing modest price increases of just 1.7%, while Northern Ireland's housing performance stands in stark contrast. Across regions, new asking prices have shown minor fluctuations, indicating a competitive yet volatile market landscape. Looking ahead, changes in government policy, particularly with the impending cessation of stamp duty concessions that will come into effect by July 2025, are expected to have a consequential impact on future buyer activity. Homebuyers are likely to rush to complete purchases before these new tax thresholds apply. The current pause in price rises might suggest a temporary stabilization or a brief moment of recalibration in a market that has seen rapid fluctuations throughout earlier months. Nevertheless, the outlook remains cautiously optimistic as market dynamics continue to unfold.