UK house prices increase by 0.6% month-on-month in July, says Nationwide
Robert Gardner, Nationwide's chief economist, said: 'Looking through the volatility generated by the end of the stamp duty holiday, activity appears to be holding up well. Indeed, 64,200 mortgages for house purchase were approved in June, broadly in line with the pre-pandemic average, despite the changed interest rate environment.
'After deteriorating markedly in the wake of the pandemic, housing affordability has been steadily improving, thanks to a period of strong income growth alongside more subdued house price growth and a modest fallback in mortgage rates.
'While the price of a typical UK home is around 5.75 times average income, this ratio is well below the all-time high of 6.9 recorded in 2022 and is currently the lowest this ratio has been for over a decade.
'This is helping to ease deposit constraints for potential buyers, as has an improvement in the availability of higher loan to value mortgages.
'Similarly, the interest rate on a typical five-year fixed-rate mortgage is around 4.3% (for a borrower with a 25% deposit). This is still over three times the all-time lows prevailing in autumn 2021, but well below the highs of (around) 5.7% reached in late 2023.'
Mr Gardner said that despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive.
He said: 'Unemployment remains low, earnings are still rising at a healthy pace, household balance sheets are strong and borrowing costs are likely to moderate a little further if (the Bank of England base rate) is lowered further in the coming quarters as we, and most other analysts, expect.
'Providing the broader economic recovery is maintained, housing market activity is likely to continue to strengthen gradually in the quarters ahead.'
Matt Thompson, head of sales at London-based estate agent Chestertons, said: 'Last month alone, some of our branches have seen an evident uplift in the number of vendors wanting to sell which has motivated more buyers to resume their search and make an offer.'
Nathan Emerson, CEO at property professionals' body Propertymark, said: 'Many people are delaying paying off their mortgages until later in life via 35-year or 40-year mortgages. Therefore, a reduction in interest rates would be very welcome to help offset ongoing financial pressures and worries over the cost of living for many.'
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: 'Lower mortgage rates, with the expectation of more reductions to come, are giving the market impetus and putting borrowers in a stronger position when it comes to negotiating their property purchase. This, in turn, is keeping prices in check.
'With the markets expecting a further rate reduction next week, we could be in for a busy autumn. Lenders continue to trim their mortgage rates, while easing of mortgage lending rules should also enable borrowers to take on bigger mortgages in coming months.'
Earlier this week, HM Revenue and Customs (HMRC) reported that house sales jumped by 13% month-on-month in June.
Across the UK, it estimated that 93,530 home sales took place during the month, which was 1% higher than in June 2024.
Bank of England figures have shown that mortgage approvals for house purchase have ticked upwards, with around 64,200 approvals made to home buyers in June – the highest figure since March this year.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: 'While some buyers are clearly pressing ahead with their purchase plans, as reflected in robust mortgage approval data for June, others may now be mulling their options more carefully as higher costs pose a fresh challenge.
'Lenders are offering solutions, however, not only with more relaxed affordability rules, but also by ramping up the number of low-deposit or 100% mortgages on offer to help more first-time buyers onto the property ladder. Longer-term mortgages, where the repayment period is stretched beyond the traditional 25-year term to 30, 35 or even 40 years are also becoming increasingly popular.'
Karen Noye, a mortgage expert at wealth manager Quilter, said: 'All eyes will be on the Bank of England next week and what it decides to do with interest rates. It was thought that a rate cut was fairly certain on Thursday, but recent inflation data coming in higher than expected may just temper things slightly and force buyers to wait.
'Should the Bank of England follow through with a rate cut, however, that will help support the buyers.'
Tom Bill, head of UK residential research at Knight Frank, said: 'Sticky inflation means a probable cut by the Bank of England next week may only be followed by one more this year. Despite a modest uptick in July, high levels of supply are keeping a lid on prices and means it is still very much a buyers' market.'
Iain McKenzie, CEO of the Guild of Property Professionals, said: 'For sellers, realistic pricing is crucial to capture buyers' attention in a more competitive landscape. For buyers, the combination of more choice and the likelihood of further mortgage rate improvements creates a compelling window of opportunity.'
Jonathan Handford, managing director at estate agent group Fine & Country, said: 'Properties purchased during the Covid-era 'race for space' – particularly in coastal and rural areas – are increasingly returning to the market as commuting patterns normalise and lifestyle priorities shift. This added supply is helping to moderate price pressures in some regions.'
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: 'A combination of pay rises ahead of inflation, falling mortgage rates and keenly-priced properties could start to reignite buyer enthusiasm in the coming months.'
Jonathan Hopper, CEO of Garrington Property Finders, said: 'Most buyers are still being prudent and pragmatic.'
Jason Tebb, president of OnTheMarket, said: 'Interest rate reductions are going to be more vital than ever when it comes to encouraging activity and momentum.'
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