Annual house price growth slows but private rent increases accelerate

One mortgage expert said markets are becoming increasingly sensitive to signs inflation could be ‘more stubborn than expected’.

Annual house price growth slowed in July, as finance experts pointed to a sluggish housing market going into the autumn amid rising mortgage rates and other cost pressures for households.

The average UK house price increased by 1.4% to reach £273,000 in the 12 months to July, the Office for National Statistics (ONS) said.

The annual growth rate slowed from 1.5% in June.

The ONS report said: “The UK annual rate slowed for the third consecutive month because of a sharp slowing in the annual rate for the South West of England, with London and the West Midlands also contributing to the slowdown.”

Average house prices increased to £293,000 (1.1% annual growth) in England, £215,000 (2.6%) in Wales, and £196,000 (2.3%) in Scotland, in the 12 months to July.

The average house price for Northern Ireland was £202,000 in the second quarter of this year, jumping by 9.2% annually. Lower price growth in the second quarter of 2025 coincided with stamp duty changes in Northern Ireland from April 1 2025, the ONS said.

Within England, the North East had the highest house price inflation, at 4.9%, in the 12 months to July.

The weakest annual percentage change in house price inflation was in London, where prices fell by 3.3%. House prices in London have been falling annually for 11 months in a row.

The ONS also said the average monthly private rent in the UK was £1,400 in August – £52, or 3.8%, higher than 12 months earlier.

The annual growth rate accelerated from 3.7% in July.

ONS head of housing market indices Aimee North said: ”The slowdown in annual UK house price inflation has continued in July driven by further slowing of the annual rate in London and the South West, which are now both seeing annual price falls.

“However, stronger annual growth within London’s rental price market helped pushed UK rental price inflation to its highest rate since December.”

The figures were released as the ONS also said on Wednesday that Consumer Prices Index (CPI) inflation increased to 3.1% in August, up from 2.9% in July.

David Hollingworth, associate director at L&C Mortgages said: “Markets are becoming increasingly sensitive to signs that inflation could prove more stubborn than expected, particularly given ongoing geopolitical uncertainty and higher fuel and energy prices.

“Consequently, homeowners have had to come to terms with higher mortgage rates and a less favourable mortgage market than just a few months ago.

“In fact, the latest round of volatility is sending fixed mortgage rates higher, with a growing number of lenders increasing their fixed rates as funding costs have shot up.

“As lenders respond to rising swap rates, it’s translating into higher costs for those looking to buy a home or remortgage.

“Jittery markets could mean further tremors for mortgage rates, and several lenders are already hiking rates for the second time in as many weeks.

“As things stand, borrowers should expect mortgage rates to remain under upward pressure in the near term.”

Sarah Coles, head of personal finance at AJ Bell, said: “A sluggish market gives buyers time to take stock. It also gives them an opportunity to beef up their finances ready for a move.

“Buyers can build their savings war chest to cover the cost of the move, and their emergency savings for unexpected costs when they get into their new home.

“First-time buyers can work on their deposit and consider a Lifetime Isa to get a Government bonus of up to £1,000 this year to supercharge their efforts.”

Nick Leeming, chairman of Jackson-Stops, said: “Homes that are well presented and realistically priced are attracting attention, while those that start too far ahead of buyer expectations risk losing momentum during the crucial first weeks of marketing.”

Amy Reynolds, head of sales at London-based estate agency Antony Roberts, said that in the rental sector: “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.”

Nathan Emerson, chief executive at property professionals’ body Propertymark, said it is important that the rental sector “attracts sustainable and continued investment to keep pace with growing demand”.