Flat Prices, Mixed Signals

House prices in the UK were unchanged in June, according to Halifax, following a 0.3% decline in May. Annual growth slowed slightly to 2.5%, with the average home now priced at £296,665. The data suggests ongoing market softness, aligning with Nationwide’s report showing the steepest monthly price drop since February 2023.

What’s Driving the Market?

• Negative pressures:

  • Higher stamp duty since April (end of temporary cuts)

  • Short-term dip in demand and affordability challenges

• Positive signs:

  • Mortgage lending is picking up

  • Four BoE rate cuts already, with two more expected

  • Rising wages and improved regulation

  • Buyer demand stronger than a year ago

Outlook:
The current flat trend may shift in the second half of 2025 as financing conditions ease and confidence improves.

Amanda Bryden, head of Mortgages at Halifax, said: “The market’s resilience continues to stand out and, after a brief slowdown following the spring stamp duty changes, mortgage approvals and property transactions have both picked up, with more buyers returning to the market. That’s being helped by a few key factors: wages are still rising, which is easing some of the pressure on affordability, and interest rates have stabilised in recent months, giving people more confidence to plan ahead.

“Lenders have also responded to new regulatory guidance by taking a more flexible approach to affordability assessments. Over the last two months, we’ve already helped an additional 3,000 buyers – including more than 1,000 first-time buyers – access a mortgage they wouldn’t have qualified for before.

“Of course, challenges remain. Affordability is still stretched, particularly for those coming to the end of fixed-rate deals. The economic backdrop also remains uncertain; while inflation has eased, it’s still above target, and there are signs the jobs market may be softening.

“But with markets pricing in two more rate cuts from the Bank of England by year end, and the average rate on newly drawn mortgages now at its lowest since 2023, we continue to expect modest house price growth in the second half of the year.”