Annual house price inflation accelerating but rental price growth cooling
The annual growth rate increased from 3.6% in April.
The figures were released as a separate ONS report showed that Consumer Prices Index (CPI) inflation rose to 3.6% in June, up from 3.4% in May and the highest since January 2024.
The increase was unexpected, with many economists forecasting inflation to remain unchanged at 3.4%.
David Hollingworth, associate director at L&C Mortgages, said: 'General anticipation had been that the rate of inflation would remain steady in June, so the increase to 3.6% is an unwelcome surprise.
'That will raise the question of whether it's enough of a surprise to force the Bank (of England) to consider a delay to any further cuts in base rate.
'The recent tone has been consistent in its suggestion that interest rates should continue to fall but it's been harder to be sure when those cuts may come, when data doesn't follow the expected path.
'The Bank's focus is on reducing the rate of inflation to its target of 2% but it may see enough reason to look through today's figures to reduce rates in the August meeting.'
Mr Hollingworth continued: 'Mortgage rates have been reflecting the market's confidence in more cuts to come, as lenders have been quick to take advantage and trim back fixed rates.
'Lenders have been locked in an attritional rate battle that has seen frequent, albeit small, reductions made to fixed rate mortgage pricing.
'Today's news could take a bit of momentum out of those reductions but may not be enough to make a major reversal in those mortgage rate improvements.
The Consumer Prices Index (CPI) rose by 3.6% in the 12 months to June 2025, up from 3.4% in the 12 months to May.
Read the full article ➡️ https://t.co/dtb7FWO7pw pic.twitter.com/3oIGRpKqCw
— Office for National Statistics (ONS) (@ONS) July 16, 2025
'However, with recent changes in regulatory approach, lenders will have more flexibility when offering higher multiple mortgages and that is already feeding through into lender criteria.
'That and the promise of further rate cuts should still give mortgage borrowers room for optimism but today's unexpected data is a reminder of just how hard it is to second-guess where rates may head.'
Average house prices increased to £290,000 (3.4% annual growth) in England, £210,000 (5.1%) in Wales, and £192,000 (6.4%) in Scotland, in the 12 months to May, according to the ONS figures.
The average house price for Northern Ireland was £185,000 between January and March, up by 9.5% annually.
Andrew Montlake, chief executive at mortgage brokers Coreco said: 'During the first half of 2025, the property market was definitely skewed by the stamp duty changes, with a lot of activity brought forward to secure the savings on offer. Now, things are now getting back on track.
'Even though inflation ticked up slightly this morning, making the Bank of England's tightrope walk between curbing inflation and promoting growth that little bit harder, it's still likely that we will see at least one rate cut this year, if not two.
'The economy is stalling and desperately needs an injection of life, which will boost sentiment in bricks and mortar and see increased buyer activity. The second half of the year could be busy if the Bank of England delivers a rate cut in August.'
Jonathan Handford, managing director at Fine & Country, said: 'The volatility that we saw in the spring – largely down to changes in stamp duty – is fading, and buyer sentiment is clearly recovering.'
Iain McKenzie, chief executive of the Guild of Property Professionals, said: 'The increase in the average UK house price over the last year underscores a return to sustainable, confidence-driven growth.'
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: 'Rate reductions have been playing their part in encouraging buyers and sellers to take the plunge and the markets still expect a further cut in (the Bank of England base rate) next month, even though inflation ticked up in June.
'Lenders have plenty of liquidity and are keen to lend, with mortgage rates fairly steady on the whole, while some lenders continue to reduce rates.'
Richard Donnell, executive director of research at Zoopla, said: 'Lower, single digit house price inflation is positive for the market as there is just enough price growth to encourage sellers to list their homes and buyers to make offers on property without the fear that prices may fall or suddenly surge higher.
'We expect price inflation to remain low as there are the most homes for sale in seven years, averaging 37 per estate agent.'
On Tuesday, Chancellor Rachel Reeves told City bosses that Britain cannot meet its growth ambitions without a 'fighting fit and thriving' finance sector, as she delivered her Mansion House speech.
The Treasury announced a package of reforms on Tuesday aimed at attracting more investment to the UK, to help grow the economy. It is also hoped that first-time buyers will be among those helped by the cutting of red tape, as part of the drive for economic growth.
Jason Tebb, president of OnTheMarket, said: 'With mortgage lending rules being relaxed to assist buyers with affordability and boost first-time buyer numbers, there is recognition that it is a struggle to get on the housing ladder but only time will tell if these measures are enough to make a real difference.'
The average private rent in the UK was £1,344 per month in June. This is £84 (6.7%) higher than 12 months earlier, according to the ONS figures.
Annual growth in rental prices cooled from 7.0% in the 12 months to May.
Commenting on today's house price data for May 2025 and rents data for June 2025, ONS Head of Housing Market Indices Aimee North said: (quote 1 of 1)💬 pic.twitter.com/vZjh2wzqag
— Office for National Statistics (ONS) (@ONS) July 16, 2025
The average rent in England was £1,399 in June, up by 6.7% (£88) from a year earlier.
In Wales, the average rent was £804 in June, marking a 8.2% (£61) annual increase.
In Scotland, the average rent in June was £999, up by 4.4% (£41) annually.
The average rent in Northern Ireland was £852 in April, the latest month for which the figures are available, up by 7.6% (£60) from a year earlier.
Nathan Emerson, chief executive of property professionals' body Propertymark, said: 'Investors in the private rental market have been deterred from investing in this crucial housing market because of tax and regulatory changes over the last 10 years.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Mail
3 hours ago
- Daily Mail
Big Four banks make major call following RBA interest rate decision
All four major banks have announced an interest rate cut, providing welcome relief for borrowers following the Reserve Bank of Australia cutting the cash rate. The central bank on Tuesday cut the cash rate by 25 basis points to 3.6 per cent, but flagged the end to its easing cycle is getting closer. Macquarie Bank was first out of the gate, confirming it will pass on the full cut to customers from Friday. Australia's other major banks have also confirmed they will pass on the RBA's full 0.25 percentage point cut to their standard variable home loan rates. ANZ and CommBank will both implement the reduction from August 22, while NAB customers will see the change take effect on August 25. Westpac will be the last of the Big Four to introduce the rate cut on August 26. All nine board members voted in favor of a cut and there was no discussion of a jumbo 50 basis point cut, Ms Bullock said. The RBA's decision will save borrowers with a $600,000 mortgage almost $90 a month in repayments and a cumulative $272 per month since cuts began in February. The move brings the cash rate to its lowest level since May 2023, with the average variable mortgage rate expected to fall to 5.5 per cent. But for many borrowers, the financial boost was behind estimates. Most economists had expected the RBA to deliver rate relief in its July meeting. In a shock 6-3 decision, the board kept rates on hold, citing a need to wait for more inflation data to ensure price growth was coming down sustainably to target. The local share market lifted modestly and the Aussie dollar fell following the decision, while money markets were pricing in two more cuts by March. Vanguard senior economist Grant Feng predicted one more cut by the end of 2025, as growth showed signs of recovery and the unemployment rate stabilizing. Treasurer Jim Chalmers said the decision was 'very welcome relief for millions of Australians'. 'The three interest rate cuts we've seen this year would not have been possible without our collective efforts to get inflation down,' he said. The RBA has just cut interest rates for the third time in six months. Today's quarter of a percentage point cut brings the cash rate to 3.60 per cent and will make a meaningful difference to millions of mortgage holders around the country. In quarterly forecasts produced by RBA staff and released alongside the cash rate decision, productivity growth was revised down by 0.3 per cent over the medium term. That would flow through to lower GDP growth, lower living standards and make it harder to get inflation under control.
Finextra
5 hours ago
- Finextra
Raast and Pakistan's Digital Economy: How Instant Payments Are Reshaping the Nation's Financial Futu: By Muhammad Qasim
Pakistan's financial sector is in the middle of a transformation — one that is changing how money moves, how businesses operate, and how people interact with the economy. At the heart of this transformation is Raast, the State Bank of Pakistan's (SBP) instant, low-cost, and secure digital payment system. Launched with the goal of improving financial inclusion and reducing reliance on cash, Raast is not just a payment method; it's a game-changer for the country's digital economy. From street vendors to freelancers, from small retail shops to large corporations, and from government institutions to ordinary citizens — Raast is making transactions faster, cheaper, and more transparent. In this article, we'll explore what Raast is, how it works, its adoption trends, the explosive growth in transaction volumes, and how it is reshaping Pakistan's digital economy. What is Raast? Raast — meaning 'direct' or 'straight path' in Urdu — is Pakistan's first real-time payment system designed to provide instant, low-cost, and secure money transfers between individuals, businesses, and government entities. Unlike traditional bank transfers that can take hours (or even days), Raast processes payments in seconds, 24/7, across all participating banks and digital wallets. Key Features of Raast Instant transfers — Payments clear in real time, any time of day. Low or zero fees — Most banks offer Raast transfers free of charge. Mobile number–based transfers — Send and receive money without sharing long account numbers. Secure SBP infrastructure — Fully regulated and backed by the central bank. Supports bulk payments — Ideal for salaries, pensions, and government subsidies. Raast's Role in Pakistan's Digital Transformation Before Raast, Pakistan's payment systems were fragmented, with slow transfers and limited interoperability between banks. Digital transactions existed, but they were often expensive, unreliable, and inaccessible to rural populations. Raast has bridged this gap by: Encouraging cashless transactions — Reducing reliance on physical currency. Boosting financial inclusion — Extending access to millions without prior exposure to banking. Connecting e-commerce and gig economy platforms — Supporting instant settlements for small sellers and freelancers. Facilitating transparent government payments — Reducing corruption and leakage in welfare programs. Transaction Volumes: The Scale of Raast's Impact The success of Raast can be measured not only in adoption rates but also in the massive transaction volumes it processes. Latest Transaction Data According to the SBP's Q3 FY 2024–25 payment system statistics: Raast processed 371 million transactions worth PKR 8.5 trillion in just one quarter. Since launch, it has handled 1.5 billion transactions with a cumulative value exceeding PKR 34 trillion . Digital channels now account for 89% of all retail transactions by volume in Pakistan. Mobile banking, branchless wallets, and e-money accounts processed 1.686 billion transactions worth PKR 27 trillion in the same quarter. This exponential growth shows how deeply Raast is embedding itself into Pakistan's financial DNA. How Raast is Reshaping the Digital Economy 1. Fueling Financial Inclusion Raast has given millions of Pakistanis access to formal banking for the first time. Rural populations can now send and receive money instantly using just a phone. Microfinance institutions integrate with Raast, expanding their reach. Women and marginalized groups can transact without visiting physical bank branches. 2. Boosting Small Businesses and E-Commerce The e-commerce industry in Pakistan has grown rapidly, but one challenge was slow and expensive payment settlements. Raast changes this by: Allowing instant settlements for online vendors. Reducing the need for cash-on-delivery (COD), which previously accounted for 60–70% of e-commerce payments. Helping micro-merchants avoid costly point-of-sale infrastructure. 3. Empowering Freelancers and the Gig Economy Pakistan is among the top countries for freelance work, with millions earning online. Raast supports these workers by: Providing quick local payment settlements. Reducing transfer costs from local platforms. Enabling platforms to pay thousands of workers simultaneously. 4. Streamlining Government Payments Government agencies and welfare programs use Raast for: Ehsaas program payouts Salary and pension disbursements Subsidy transfers for fuel, food, and utilities By moving these payments to Raast, the government improves speed, reduces leakages, and increases transparency. 5. Reducing Cash Dependency Pakistan's economy has long relied heavily on cash. This creates problems like tax evasion, corruption, and inefficiency. Raast's growing popularity is a direct blow to cash dominance by: Offering a free, fast alternative to cash. Making digital transactions accessible even for low-income groups. Creating a financial trail that strengthens the formal economy. Case Studies: Real-World Impact of Raast Case 1: A Street Vendor in Lahore A chai seller who previously accepted only cash now uses Raast to receive payments directly to his bank account via mobile number. Customers can pay instantly, and he no longer worries about carrying large amounts of cash at night. Case 2: A Karachi-Based E-Commerce Store Before Raast, the store owner relied on COD, which caused delays and cancellations. After integrating Raast payments, settlements are instant, returns are lower, and customer trust has improved. Case 3: Government Subsidy Disbursement A small farmer in Sindh receives fertilizer subsidies via Raast directly into his account, cutting out middlemen and ensuring he gets the full amount. Challenges to Raast's Full Potential While Raast has made great strides, some hurdles remain: Digital Literacy Gaps — Many rural and older populations still need education on how to use Raast safely. Internet & Mobile Coverage — Remote areas lack consistent access to reliable mobile data. Cybersecurity Concerns — As transactions grow, so does the risk of fraud and phishing scams. Resistance to Change — Some people still prefer cash due to habit or distrust in banking. The Road Ahead: Future of Raast and Digital Payments in Pakistan The SBP has ambitious plans to expand Raast's scope: Merchant Payments — Making Raast the default payment method for retail transactions. Cross-Border Transfers — Enabling remittances through Raast in collaboration with global payment systems. QR Code Integration — Allowing small shops to accept payments simply by displaying a QR code. Open API Ecosystem — Encouraging fintech startups to build innovative apps using Raast's infrastructure. If these expansions succeed, Pakistan could see cashless transactions become the norm within a decade, dramatically increasing economic transparency and efficiency. Conclusion Raast is more than just a payment method — it's a pillar of Pakistan's digital transformation. By enabling instant, low-cost, and secure payments, it is helping formalize the economy, support small businesses, empower freelancers, and improve government efficiency. The transaction volume growth — from zero to over 1.5 billion transactions worth PKR 34 trillion in just a few years — is proof of its adoption and potential. With the right infrastructure, education, and security measures, Raast could lead Pakistan into a future where digital finance is not the exception but the default.
Reuters
7 hours ago
- Reuters
Paytm's unit gets Indian central bank nod to operate as online payment aggregator
BENGALURU, Aug 12 (Reuters) - Indian fintech firm Paytm's ( opens new tab Payment Services unit has got 'in-principle' approval from the country's central bank to operate as an online payment aggregator, it said on Tuesday. In August 2024, the company had said it would submit an application with the Reserve Bank of India to seek a payment aggregator license. That move came seven months after the central bank ordered it to wind down its payments bank. Payment services accounted for more than half of the fintech firm's consolidated revenue in the quarter ended June 30. Last week, China's Ant Group( opens new tab exited the firm by selling its remaining 5.84% stake in block deals.
