UK house prices rise as market stabilizes after previous dip

In the UK, the housing market has shown a rebound in July 2025 following a notable dip in June 2025, as reported by Nationwide Building Society. This upturn comes after a tumultuous period influenced by various economic factors, including the end of the stamp duty holiday and changing interest rates. The average house price rose to £272,664 in July, marking an increase from £271,619 in June. Moreover, annual house price growth rates saw a rise from 2.1% to 2.4%, while the house price to earnings ratio reached its lowest mark in over a decade, now standing at about 5.75 times the average income. This improved affordability has eased some constraints faced by potential buyers. Nationwide's Chief Economist, Robert Gardner, provided insights into the current market. He noted that even in the context of a changing interest rate landscape, mortgage approvals for house purchases remained robust, with 64,200 mortgages granted in June 2025, close to pre-pandemic averages. These statistics suggest an overall confidence in the market as the economy starts stabilizing again after the pandemic. Gardner highlighted that many factors contributing to this renewed activity in housing include a period of income growth and a modest reduction in mortgage rates. Specifically, the interest rate on a typical five-year fixed-rate mortgage was around 4.3% for borrowers with a 25% deposit, although this is significantly higher than the record low seen in autumn 2021. Nevertheless, this drop in the house price to earnings ratio helps alleviate deposit constraints for prospective homeowners, which may further stimulate demand in the market. In this context, the economist stressed the importance of maintaining broader economic recovery to sustain the upward trend in housing market activity. He pointed out that with unemployment rates low and household finances in good shape, there is a favorable environment overall. Additionally, he anticipates that borrowing costs may ease even more if the Bank of England lowers its base rate in the forthcoming months, as most analysts predict. Overall, these developments indicate that the UK housing market is gradually regaining stability and strength, as evidenced by improved affordability, steady income growth, and a resilient economic backdrop. Such conditions could promote sustained housing market activity in the future, ultimately benefitting both buyers and the economy at large.