The UK house prices rebound in July has brought fresh optimism to the market. Prices rose by 0.6% to £272,664, reversing June’s steep monthly decline.
According to Nationwide, this growth followed the sharpest fall in over two years. The annual rate also increased to 2.4%, up from 2.1% in June.
Improved affordability and greater access to mortgages helped fuel this recovery. Britain’s largest building society said buyers now face the lowest price-to-income ratio in over a decade.
Robert Gardner, Nationwide’s chief economist, noted that homes now cost about 5.75 times the average income. This makes deposits more manageable for buyers.
Mortgage availability has also improved. High loan-to-value options are more accessible, which supports first-time buyers.
However, borrowing costs remain elevated. A typical five-year fixed mortgage with a 25% deposit still costs more than three times what it did in 2021.
Despite this, market activity remains strong. June saw 64,200 mortgage approvals, showing steady buyer interest.
Jeremy Leaf, a London estate agent, said transactions are holding up well. He added that the market may improve further if interest rates fall next month.
Stamp duty relief ended in April, which briefly cooled demand. The market is now adjusting and regaining momentum.
Attention is now on the Bank of England. The Monetary Policy Committee meets on 7 August to decide whether to lower the 4.25% base rate.
Financial markets expect a rate cut to 4%, with another drop possible before the end of the year.
Lower rates would reduce mortgage costs, giving buyers more confidence to act.
However, inflation rose to 3.6% in June, which complicates the outlook. The Bank had expected inflation to stay at May’s level of 3.4%.
Karen Noye, a mortgage expert at Quilter, said the higher inflation figure may delay any rate cut. Still, she believes a cut would boost buyer activity and support price growth.
