UK house price growth decelerated in July, with annual increases falling to 1.8% compared to 2.2% in June, according to data from Nationwide Building Society. The average property price now stands at £277,542.
The slowdown comes amid elevated mortgage rates and uncertainty over potential tax changes affecting the housing market. Monthly prices remained flat, suggesting buyers are negotiating harder in what industry professionals describe as a buyers’ market.
Economic pressures weigh on market
Robert Gardner, Nationwide’s Chief Economist, said: “Market activity and house prices have remained soft in recent months, in part reflecting the uncertain economic backdrop. Geopolitical tensions remain high, with the conflict between Iran and the US again exerting upward pressure on energy prices and market interest rates in recent weeks.”
The Bank of England held the base rate at 3.75% this week for the fifth consecutive meeting. However, some lenders have increased mortgage rates in recent days, adding to affordability concerns for buyers despite the central bank’s steady approach.
Regional market dynamics
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, reported: “In our offices, prices remain flat with sensible offers being accepted. There are more sellers than buyers, but sellers aren’t panicking – asking prices are coming down, but a lot of that is simply initial overpricing meeting the time it takes to find the market level.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, noted: “Flat monthly house prices suggest those who are transacting are not willing or able to pay over-the-odds but are taking advantage of this buyers’ market and negotiating accordingly.”
Tax uncertainty dampens confidence
Tom Bill, head of UK residential research at Knight Frank, highlighted taxation concerns: “A combination of higher mortgage costs and uncertainty around property taxation has kept demand in check this summer. The slowdown is presumably why Andy Burnham needed to rule out replacing Stamp Duty with a land value tax this week although the annual game of ‘guess the tax rise’ is not over for the property market.”
Jason Tebb, President of OnTheMarket, observed: “Average property values were flat on a monthly basis as focused, price-sensitive buyers negotiate, while sellers realise they will struggle to sell over-ambitiously priced homes when there is more stock to choose from.”
Market resilience despite headwinds
Nathan Emerson, Chief Executive of Propertymark, said: “Steady house prices reflect a housing market that continues to find balance despite ongoing economic and political change. A combination of constrained housing supply, changing borrowing costs and varying levels of buyer demand continues to influence market conditions.”
Iain McKenzie, Chief Executive of The Guild of Property Professionals, added: “In the current market, realistic pricing has become more important than ever. Buyers are well informed, have plenty of options available and are willing to negotiate, meaning sellers who continue to price based on yesterday’s market are finding their properties sit unsold for much longer.”
Nicky Stevenson, Managing Director of Fine & Country, noted that July is typically a quieter month: “July can be a more measured month for the property market, as the intensity of the spring season gives way to the summer holiday period. That can make activity feel quieter on the ground, but it does not mean demand has gone away.”
Outlook
The market’s trajectory will likely depend on inflation trends and mortgage pricing. Industry professionals suggest that greater policy certainty from the new Prime Minister’s housing agenda, combined with more predictable borrowing costs, could help rebuild buyer confidence. Despite the slowdown, transaction activity continues among buyers who need to move, albeit with more aggressive price negotiations than in previous months.
