1 July 2025
If you are covering the latest Nationwide House Price Index, please see the following comment from Rosie Hooper, chartered financial planner at Quilter Cheviot:
“The latest data from Nationwide shows house prices fell by 0.8% in June, bringing annual growth down to 2.1%. This marks a considerable softening compared to last month’s figures, which saw 0.4% monthly growth and 3.5% on an annual basis, and highlights a housing market still adjusting to high borrowing costs and shifting buyer sentiment.
“Affordability remains a huge hurdle for many buyers. While the effective interest rate on new mortgages edged down slightly to 4.47% in May, repayments are still considerably higher than just a few years ago. Many prospective buyers, particularly first-time purchasers, face tough affordability assessments and elevated upfront costs following the changes to stamp duty.
“That said, recent data from the Bank of England shows signs of life returning to the mortgage market. Net borrowing of mortgage debt rose by £2.1bn in May, following a sharp drop in April, while gross lending jumped to £20.4bn, which is the highest level since January. Mortgage approvals for house purchases also rose for the first time this year, increasing to 63,000. Though still below historic norms, this suggests that buyer confidence is starting to return in dribs and drabs.
“While the market is still digesting the stamp duty reforms in April, they will soon become the norm, and their immediate impact will fade into the rear-view mirror. First-time buyers and movers alike are already beginning to adjust to the new thresholds, which should help stabilise activity over the coming months.
“Geopolitical risks also linger in the background. Tensions in the Middle East appear to have calmed for now, but any renewed escalation could push up inflation and reignite pressure on interest rates, potentially affecting mortgage pricing later this year.
“We are not far away from the summer holidays starting which can be a quieter period for the housing market, as many households prioritise holidays over house hunting. With schools off and professionals away, activity often slows across the board, from viewings to mortgage processing, leading to a natural lull in transactions. This may already be weighing on house prices, and we could see further downward pressure in the coming months. However, a seasonal dip is nothing new. Prices could fall slightly more over the period, but we may not see any major price movements until the market begins to warm up again in early autumn, when buyers and sellers return with renewed focus.”
