16 July 2025
If you are covering the latest Government house price index, please see the following comment from Holly Tomlinson, financial planner at Quilter:
Today’s figures from the UK House Price Index show that average property values rose in May, offering further evidence that the housing market remains in a state of fragile stability. On an annual basis, prices are now up 3.9%, rising from 3.6% in April, with the average UK house price reaching £269,000. This marks a modest acceleration in annual growth, though it follows a period of volatility when house price inflation slowed as a result of Stamp Duty Land Tax (SDLT) changes introduced in April.
This morning's inflation surprise has cast fresh uncertainty over the mortgage market. While lenders had been trimming rates in anticipation of further base rate cuts, the higher-than-expected CPI figure may delay that trajectory. For buyers, this means affordability remains a key constraint, particularly for those relying on fixed-rate deals to manage stretched budgets. The housing market remains finely balanced, with sentiment now hinging on the Bank of England’s next move in August.
The announcement yesterday that Nationwide would widen access to its ‘Helping Hand’ mortgage is a step in the right direction, but it highlights just how limited current support for first-time buyers really is. The Chancellor’s Leeds Reforms may ease some lending restrictions, but without tackling the root causes of unaffordability, the impact will be modest at best.
While the government’s push to make the mortgage guarantee scheme permanent under the ‘Freedom to Buy’ banner sounds bold, its track record has been underwhelming. Without meaningful changes to housing supply, these reforms risk simply being a drop in the ocean.
The government will also need to examine its own risk appetite because as a result of expanding high loan-to-value mortgages under the Leeds Reforms it exposes people to a greater chance of default and possibly then repossession. In a volatile market, small deposits and large loans increase the chance of negative equity, which is hardly a stable foundation for first-time buyers.
Ultimately, the most effective way to support first-time buyers is by building more homes. The Chancellor’s reforms must be matched with a serious commitment to increasing housing supply if they’re to make a lasting difference.
This data still reflects transactions that began several months ago, so it may not fully capture more recent shifts in sentiment or expectations of rate cuts later this year. The summer months typically cause a slowdown in the housing market as people swap house hunting for holidays.
Any sustained recovery is likely to be slow and regionally uneven, particularly as broader economic headwinds such as rising inflation continue to weigh on confidence.
