"Household balance sheets are strong, and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters, as we and most other analysts expect"
- Robert Gardner - Nationwide
UK house prices rose by 2.1% annually in June, down from 3.5% in May, according to new data from Nationwide. On a monthly basis, prices slipped by 0.8% after seasonal adjustments, bringing the average property price to £271,619.
“UK house price growth slowed to 2.1% in June, from 3.5% in May,” said Robert Gardner, Nationwide's chief economist. “Prices declined by 0.8% month-on-month, after taking account of seasonal effects. The softening in price growth may reflect weaker demand following the increase in stamp duty at the start of April. Nevertheless, we still expect activity to pick up as the summer progresses, despite ongoing economic uncertainties in the global economy, since underlying conditions for potential homebuyers in the UK remain supportive.”
Gardner pointed to several indicators supporting housing market activity. “The unemployment rate remains low, earnings are rising at a healthy pace in real terms (i.e. after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we and most other analysts expect,” he noted.
Regional picture: growth slows across most areas
Nationwide’s quarterly data for the second quarter of 2025 revealed a slight cooling in price growth in most UK regions.
“Northern Ireland remained the strongest performer by a wide margin, though it did see a slowing in annual price growth to 9.7%, from 13.5% in Q1,” explained Gardner. “While significantly ahead of other UK regions in Q2, it was similar to the robust rates of growth seen in border regions of Ireland in recent quarters. Scotland recorded a 4.5% annual rise, while Wales saw a 2.6% increase.”
Across England, annual price growth stood at 2.5%, a modest decline from 3.3% in the first quarter. The difference in performance between northern and southern regions narrowed slightly.
Northern England (covering the North, North West, Yorkshire & The Humber, East Midlands and West Midlands) saw prices rise by 3.1%
Southern England (including South West, Outer South East, Outer Metropolitan, London and East Anglia) recorded a 2.2% annual increase
Within England, the North led with a 5.5% annual rise in prices, while East Anglia recorded the weakest growth, with a 1.1% year-on-year increase.
Terraced homes record strongest gains
New analysis by property type revealed notable variations in price trends over the past 12 months.
“Terraced houses have seen the biggest percentage rise in prices over the last 12 months, with average prices up 3.6% year on year,” Gardner commented.
“Flats saw a further slowing in annual price growth to 0.3%, from 2.3% last quarter. Semi-detached properties recorded a 3.3% annual increase, while detached properties saw a 3.2% year-on-year rise,” he added.
Industry reaction
Mark Harris, chief executive of mortgage broker SPF Private Clients, says, “Moderating house price growth is good news for the wider health of the housing market, making home ownership more realistic for first-time buyers, many of whom are already relying on the Bank of Mum and Dad.
“Lenders have been reducing mortgage rates and enhancing loan-to-incomes, increasing the size of loan that some borrowers can access. However, while the borrowing environment may be easing, higher inflation and the wider economic picture remains a concern, which could mean the pace and size of further base rate reductions is more gradual than markets thought only a short while ago."
Ryan Etchells, Chief Commercial Officer at Together comments, "The latest fall in house price growth indicates an expected downturn in the market following the stamp duty changes brought in in April.
“However the fall may ease affordability issues for some buyers and we have seen many lenders reducing mortgage rates. We would also expect to see more cuts if, as expected, the Bank of England continues to gradually reduce the base rate over the course of the year.
“There are still a lot of opportunities out there for homebuyers and property investors. At Together, we are still seeing a healthy amount of activity from buyers seeking alternative routes onto the property ladder, such as Shared Ownership mortgages. We are also seeing interest from investors and landlords looking at ways to diversify their property portfolios to improve yields, including investing in Houses in Multiple Occupancy (HMOs), student housing, and holiday lets.
“Those keen to move forward with their property plans this summer can consider the wide range of financial products available, such as specialist personal and buy-to-let mortgages, or short-term bridging loans for fast, flexible finance.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “In our offices, the amount of stock presently overhanging the market has not only resulted in lower prices as seen in these figures, but has meant more protracted transactions.
“Looking forward, only realistically-priced properties which stand out from the crowd will continue to attract attention as worries about the economy and inevitable tax rises on the horizon play their part."
Gareth Lewis, deputy CEO of specialist lender MT Finance, says: “Softening house price growth is not necessarily a bad thing when buying a home remains beyond the means of many. There are so many considerations when looking to purchase – stamp duty is a big concern, particularly now that the concession has been removed, while the high cost of living isn’t easing, and interest rates haven’t come down as quickly as many hoped. With so many things to consider, it is no wonder that demand is suppressed.
“While softening prices will help those trying to buy, they are still a long way off where they need to be. Something has to change because prices remain overinflated, whether that be another reduction in stamp duty or further interest rate reductions.
“Building more affordable homes is a step in the right direction, but it’s not a quick solution, particularly given the archaic planning system, which takes forever.”
