UK house prices rise in July as mortgage rates fall

House prices jumped at the fastest pace in seven months in July as borrowers reduced mortgage rates ahead of an interest rate cut by the Bank of England, according to Halifax.

The UK's largest lender said a typical property cost £291,268 in July, up more than £2,200 compared to the previous month, "following three relatively flat months".

Property values rose by 0.8% in July compared to June, while prices were up 2.3% compared to the same time last year — the fastest pace of growth since January.

Amanda Bryden, head of mortgages at Halifax, expects prices to trend higher through the year, helped by the recent cut in UK interest rates.

“Last week’s Bank of England’s base rate cut, which follows recent reductions in mortgage rates, is encouraging for those looking to remortgage, purchase a first home or move along the housing ladder. However, affordability constraints and the lack of available properties continue to pose challenges for prospective homeowners," she said.

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"Against the backdrop of lower mortgage rates and potential further base rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year.”

Northern Ireland continued to record the strongest property price growth of any nation or region in the UK, rising by 5.8% on an annual basis in July, up from 4.1% the previous month and the highest increase since February 2023, to an average of £195,681.

In Wales, house prices grew 3.4% to £221,102, while in Scotland they gained 2.1% over the last year to hit £205,264.

But at the other end of the table, Eastern England was the only region or nation to record a fall across the UK — down 0.4% to £330,282.

House prices in the North West of England grew by 4.1% to £232,489, while in London they gained 1.2%. The capital continues to have the most expensive property prices in the UK, averaging £536,052.

Holly Tomlinson, financial planner at wealth management company Quilter, said the housing market could "start to heat up" after the Bank of England cut rates for the first time in more than four years.

She said while the cut would have a minor impact on repayments for variable and tracker mortgages, and no change for fixed-rate deals, the "change in rates does a lot for buyer and seller confidence".

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"A feeling that rates are going in the right direction though will help many people decide to take the leap back into the market, pushing up demand for homes," she said.

Tomlinson added those "on the fence about selling" their home may also decide to go ahead.

Matt Thompson, head of sales at London-based estate agent Chestertons, suggested the introduction of sub-4% mortgage rates by lenders has helped boost buyer confidence.

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