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The UK housing market showed further signs of cooling in June, with new data revealing a 1.2% monthly decline in average house prices—the sharpest drop since January 2025. According to the Halifax House Price Index, the annual growth rate has slowed to just 0.8%, down from 2.1% in May, as high mortgage rates and affordability constraints deter buyers. The average UK home now costs £285,000, nearly 5% below the peak seen in late 2023.
The slowdown comes despite expectations of impending rate cuts from the Bank of England. Major lenders, including HSBC and NatWest, have kept fixed-rate mortgage deals above 5% for most borrowers, reflecting cautious sentiment in the financial sector. Until the BoE signals a definitive shift toward easing, mortgage rates are unlikely to fall significantly,” said David Robinson, housing economist at Lloyds Banking Group.
First-time buyers continue to face significant hurdles. A survey by the mortgage broker L&C found that 68% of prospective buyers under 35 have delayed their plans due to high borrowing costs. The government’s mortgage guarantee scheme, reintroduced last year, has had limited impact, with only 12,000 applications approved since its launch.
Regional disparities are also widening. While London and the Southeast saw prices fall by 2.3% and 1.8%, respectively, more affordable regions like the North East recorded modest gains of 0.4%. Analysts attribute this to a “flight to affordability,” as buyers seek cheaper alternatives amid economic uncertainty.
The rental market remains tight, with average rents rising by 6.5% year-on-year, according to Zoopla. Tenant demand continues to outstrip supply, particularly in urban centers, exacerbating the cost-of-living squeeze. Housing charities have called for urgent reforms, including stricter rent controls and increased social housing investment.
Economists warn that the housing downturn could weigh on consumer confidence and spending, further dampening economic growth. With the BoE maintaining a cautious stance, a meaningful recovery in the property market may remain elusive until late 2025 or early 2026.
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