Average UK house prices increased by 1.4%, to £273,000, in the 12 months to July, down from 1.5% in the 12 months to June, the latest UK House Price Index from the Land Registry shows.
Average house prices increased by 1.1% in England, lower than in the 12 months to June (1.2%). House price annual inflation slowed for the third consecutive month in England, mainly because of a sharp slowing in the annual rate for the South West, with London and the West Midlands also contributing to the slowdown.
Annual house price growth in Wales increased to 2.6%, from 1.6% in the 12 months to June, with annual growth in Scotland also increasing from 1.6% to 2.3%.
The North East was the English region with the highest house price inflation, at 4.9%, in the 12 months to July, up from 4.0% in June.
The lowest annual percentage change in house price inflation was in London, where prices decreased by 3.3%, down from an annual fall of 3.1% in the 12 months to June. This is the eleventh consecutive month where there has been an annual fall in house prices in London, with Inner London particularly affected, and represents the lowest annual rate for London since January 2024. The average house price in London is now £19,000 below the recent peak in July 2025, at £569,000.
Chris Storey, chief commercial officer at Atom Bank, commented: “This data marks a turning point in house point growth. Given the latest Lloyds house price index - which is more up to date - has reported the first annual house price fall in three years, we are likely to see further falls play out in next month’s ONS data. Against the current backdrop, the market has been driven by those who feel moving is a necessity, rather than by aspirational buyers.
“Having risen to 3.1% today, inflation is forecast to increase in the months ahead. The expectation is that the Bank of England will increase Base Rate, which will further dampen enthusiasm among buyers. We would ordinarily expect activity to pick up now following the summer holidays and as buyers attempt to complete deals before Christmas, but don’t be surprised if the market remains more subdued than usual.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: “We're seeing a sensible, needs-driven market: well-presented homes priced correctly are selling, and those pitched too hopefully are sitting.
“We expect a quieter-than-usual September and October in terms of new stock coming to market as people 'wait and see' ahead of the Budget. However, stamp duty isn't changing on 28 October, so there's little to be gained by holding off, and every week you stall is another week for a chain to wobble. Exchange when your paperwork is ready, not when the Chancellor sits down.
“Rents are a different story. Supply remains tight as landlords continue to leave the sector, so tenants face stiff competition for good homes, and we don't see that easing this autumn. Overall, we’re hoping for a post-Budget bounce and a busy December setting us up well for 2027.”
Ian Futcher, financial planner at Quilter, added: "While transaction volumes remain relatively subdued, continued price growth suggests demand has held up despite the affordability challenges buyers continue to face.
“However, these figures reflect transactions agreed several months ago and may not fully capture the pressures now building in the mortgage market. Although the Bank of England is widely expected to leave the base rate unchanged at tomorrow's meeting, borrowers are already feeling the effects of a changing interest rate environment. Several major lenders have increased mortgage rates this week as swap rates and funding costs have moved higher, making borrowing more expensive for prospective buyers and those approaching remortgage. The longer the US and Iran conflict drags on and subsequently increases inflation the longer rates may remain high.
“That creates an increasingly difficult backdrop for the housing market. While a hold in the base rate may offer some reassurance, what matters most for buyers is the rate available on the mortgage products they need today. Higher mortgage costs reduce affordability, particularly for first-time buyers who are already grappling with elevated house prices and tougher lending criteria.
“The data also shows that markets where affordability is more stretched, most notably London, are struggling to generate the same momentum. With the average London property now worth £550,000 and prices down 3.3% annually, affordability constraints remain a significant drag on activity.
“Looking ahead, much will depend on whether this recent upward pressure on mortgage pricing proves temporary or becomes a more sustained trend. If lenders continue to raise rates despite the Bank holding fire, the market could face renewed strain as affordability deteriorates further. The underlying demand for homeownership remains strong, but higher borrowing costs risk making the path onto, or up, the property ladder even more challenging for many households.”
