1 August 2025 — The UK housing market showed renewed strength in July, with Nationwide’s House Price Index revealing a 0.6% monthly increase in average home values. This rise pushed the typical property price to £272,664, marking one of the strongest monthly performances so far this year.
Annual house price growth also accelerated, climbing to 2.4% compared to the same month in 2024. The figures indicate that after a period of uncertainty, the property market is regaining momentum.
Affordability at Its Best in a Decade
One of the most striking takeaways from Nationwide’s July report is that housing affordability has improved to its most favourable level in 10 years. Average property values now stand at 5.75 times typical earnings, a notable shift from the affordability pressures that dominated much of the early 2020s.
This improvement has been underpinned by:
- Higher availability of 90% and 95% loan-to-value (LTV) mortgages, giving first-time buyers more options.
- Slower growth in property prices relative to wages over the past two years.
- A gradual easing of mortgage rates, particularly in the shorter-term lending market.
Mortgage Approvals and Market Activity
The report noted that 64,200 mortgages were approved in July, underlining steady demand despite lingering caution among buyers. Approval levels are now broadly in line with pre-pandemic norms, suggesting that confidence is slowly returning.
However, Nationwide cautioned that while affordability has improved, challenges remain. Five-year fixed mortgage rates are still more than three times higher than they were in autumn 2021, when ultra-low borrowing costs helped fuel a surge in property transactions.
This means many households are still constrained by elevated monthly repayments, particularly in southern England where property prices are significantly above the national average.
Industry Insight: Market Holds Steady
Estate agent Jeremy Leaf welcomed the findings, pointing out that transactions have held up better than expected, even during a period of mixed economic signals. He added that if the Bank of England continues cutting interest rates later in 2025, the housing market could experience a further boost in buyer confidence and transaction volumes.
Leaf’s assessment reflects a wider view among market commentators that while the UK housing market is not yet in full recovery mode, it is showing resilience against economic headwinds.
Regional Variations in Growth
Though Nationwide’s index tracks the UK average, regional dynamics remain uneven:
- Northern regions are seeing relatively stronger growth due to lower price bases and improving affordability.
- Southern England and London remain under pressure, with many first-time buyers struggling to meet higher borrowing costs.
- Scotland and Wales continue to benefit from more balanced affordability ratios, sustaining healthy demand.
Outlook: Strengthening or Short-Lived?
The July rebound raises the question of whether the market is entering a sustained recovery or simply experiencing a seasonal uplift. Much depends on:
- The Bank of England’s next policy moves following its latest rate cut to 4%.
- The pace of wage growth, which has been helping affordability improve.
- The supply of new mortgage products, particularly in the higher LTV segment.
If borrowing costs continue to ease through the remainder of 2025, Nationwide’s data suggest the housing market could see further gains, supported by pent-up demand from buyers who had delayed moves during the past two years of higher interest rates.
Conclusion
Nationwide’s July 2025 house price report paints a cautiously optimistic picture for the UK property sector. With prices rising 0.6% month-on-month and affordability at its best point in a decade, conditions are improving for buyers and sellers alike.
Yet, challenges remain. Mortgage rates are still elevated compared to the low-cost era of 2021, and regional disparities continue to define the market. The coming months — especially the Bank of England’s next rate decisions — will be critical in determining whether this rebound develops into a sustained upward trend or remains a short-lived bounce.
