7 August 2025 — The UK housing market gained fresh momentum in July, with the Halifax House Price Index recording a 0.4% month-on-month increase, marking the sharpest rise so far this year. The average UK home now costs £298,237, up 2.4% compared to July 2024.
The figures suggest that cooling inflation, easing mortgage rates, and rising wages are beginning to support a modest revival in property market activity after two years of subdued growth.
Regional Standouts: Northern Ireland Leads the Charge
The July data reveal stark differences across the UK’s regional markets.
- Northern Ireland posted a remarkable 9.3% annual growth, making it the strongest-performing area in the UK for the second consecutive month. Analysts point to relatively lower property prices compared to the UK average, combined with robust local demand and limited housing supply, as key drivers.
- Scotland recorded 4.7% growth year-on-year, with Edinburgh and Glasgow remaining focal points for buyer demand despite broader economic uncertainty.
- Wales saw 2.7% growth, supported by continued interest from buyers relocating from England in search of better value and quality of life.
In England, regional growth patterns are varied:
- The North West and Yorkshire & Humber both recorded around 4% annual price growth, outperforming most southern regions.
- London, while still the costliest area in the country with an average home price of £539,914, saw a subdued 0.5% annual rise — a reflection of affordability challenges and a market that has already seen years of significant price inflation.
Drivers Behind the Uptick
Halifax’s Amanda Bryden highlighted that “slightly lower mortgage rates and improving wage growth” have contributed to better affordability, especially in markets outside the South East. The Bank of England’s recent sequence of modest interest rate cuts, combined with competition among lenders, has pushed average mortgage rates to their lowest point in over 18 months.
Industry experts also point to:
- Relaxed lending criteria among some banks, allowing buyers to borrow slightly more relative to their income.
- Improved buyer sentiment, as falling inflation gives households more financial breathing room.
- Seasonal market activity, with summer often bringing a boost in transactions.
Affordability Still a Challenge in the South
While the data point to renewed energy in the housing market, regional disparities remain stark. London and parts of the South East continue to face significant affordability pressures, where even a small rise in mortgage rates can price out large segments of the market.
For first-time buyers in high-cost areas, the loan-to-income ratios required remain among the highest in Europe, and many are relying on longer mortgage terms — often 35 to 40 years — to manage monthly repayments.
Outlook: Momentum Building for Autumn
Many property professionals believe the Halifax figures could mark the start of a more sustained recovery phase, provided interest rates continue to edge lower. If the Bank of England delivers another cut later in the year, as some economists expect, transaction volumes could rise further through the autumn.
According to estate agents and market analysts:
- Seller confidence is improving as prices stabilise, leading to more listings.
- Buyer demand is being supported by competitive mortgage offers, particularly for borrowers with larger deposits.
- Overseas interest, especially in major cities, could pick up if sterling remains relatively weak compared to other currencies.
However, challenges remain. Any unexpected spike in inflation or reversal in rate-cut expectations could slow the recovery, particularly in more expensive regions.
Conclusion
The July 2025 Halifax House Price Index offers one of the most optimistic snapshots of the UK housing market this year. Northern Ireland’s near-double-digit growth, solid performances in Scotland, Wales, and northern England, and modest improvement in affordability all point to a market cautiously shifting from stagnation toward steady growth.
While London and the South East still face affordability hurdles, the national trend suggests that lower borrowing costs and improving household incomes could lay the groundwork for a more balanced and sustainable property market in the months ahead.
