5 September 2025
If you are covering the Halifax House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:
The latest Halifax index shows UK house prices rose by 0.3% month-on-month in August, leaving them 2.2% higher year-on-year, with the average property now priced at £299,331. This marks a new record high for UK house prices, edging past the previous peak set in July.
The figures point to a market that while subdued continues to defy expectations. Bank of England data published this week showed mortgage approvals rising slightly, signalling that demand is starting to recover slowly. It offers some green shoots of optimism even as summer comes to an end.
Yet affordability remains the key constraint. Mortgage rates, though down from their peak, have proved sticky and even edged back up in recent weeks as swap rates moved higher. First-time buyers still face a daunting hurdle, while many existing homeowners are reluctant to take on new borrowing, keeping transaction volumes depressed.
Budget rumours are also adding another layer of uncertainty. Talk of new property-related taxes is likely to keep many would-be sellers on the sidelines, fearful of moving just before potential reforms. This risks locking up the market further: fewer homes for sale could paradoxically fuel prices in the short term by intensifying competition, particularly among first-time buyers, but at the cost of worsening long-term affordability.
Meanwhile, supply-side challenges persist. New-build completions are slowing, and the rental market continues to surge at record pace, leaving renters with less capacity to save for deposits. Regional disparities remain stark, with London and the South East weighed down by affordability pressures, while more affordable parts of the UK are showing relative resilience.
All told, while there are tentative signs of life, the housing market faces a challenging winter. Without a decisive fall in borrowing costs, green shoots may quickly wither, and affordability will remain the central obstacle to sustained recovery.
