The UK housing market has experienced its sharpest July price drop in more than two decades, with the average asking price falling by £4,531 (1.2%) to £373,709, according to property platform Rightmove. This steep decline surpasses typical seasonal July dips and signals heightened market sensitivity amid a competitive seller environment.
Rightmove has adjusted its house price growth forecast for 2025, scaling back from 4% to 2%, attributing this to increased seller competition that is suppressing price rises. Nonetheless, the platform continues to expect approximately 1.15 million transactions for the year.
Phillip Bishop, managing director at Perry Bishop in Cirencester, noted, “Stock levels are significantly higher than last year, balanced by strong buyer registrations and increased viewing activity. Buyers are more discerning, carefully considering their options, while motivated sellers who price realistically are achieving successful sales.” He anticipates a resurgence in buyer activity this autumn as serious purchasers return to the market following the summer lull.
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London, particularly inner London, has been a significant driver of price reductions, with asking prices falling 1.5% citywide and 2.1% in inner London. The April stamp duty hike has disproportionately affected these higher-priced areas. In contrast, regions like the North East have seen a 1.2% month-on-month increase, continuing a trend where more affordable markets enjoy faster price growth.
Summer sellers face stiff competition for buyers’ attention, but competitive new listings and attractive pricing have improved affordability, sparking buyer interest. Anticipated future Bank of England base rate cuts and recent easing of mortgage lending criteria offer additional optimism.
Rightmove’s mortgage tracker shows that the average two-year fixed mortgage rate has declined to 4.53% from 5.34% a year ago. Property expert Colleen Babcock emphasizes that “price remains paramount in today’s high-supply market. Sellers who price their homes competitively reap buyer interest and sales, as buyers can readily identify overvalued properties amid abundant options.” She also highlights the positive impact of falling mortgage rates on affordability, with further base rate cuts expected before 2026.
In the rental market, Hamptons has revised 2025 rental growth forecasts downward to 1.0% nationally from 4.5%, citing a swifter market slowdown. Lower mortgage rates have enabled more renters to become homeowners, dampening rental demand. Rental price growth slowed to 0.4% annually in June, the smallest increase since August 2020.
Aneisha Beveridge, Hamptons’ head of research, observed, “The rental market slowdown initially centered in London is now evident nationwide, driven by affordability pressures and economic factors. However, challenges like limited rental supply and regulatory cost pressures for landlords persist, leaving room for further rental growth.”
Nathan Emerson, CEO of Propertymark, welcomed government reforms aimed at assisting lower-income borrowers but stressed the critical need for the UK government and devolved administrations to meet housing supply targets to stabilize prices amid real demand.