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There is a growing sense of optimism in the UK housing market as house prices saw a notable increase in July. Both the Nationwide and Halifax house price indices recorded accelerating growth, with Nationwide reporting a 0.3% month-on-month increase and Halifax showing a stronger 0.8% rise.
According to Halifax, the average property cost £291,268 in July, up from £289,042 in June—a 2.3% year-on-year increase. This positive trend suggests that confidence in the housing market is improving across the sector, even if not all key indicators are fully aligned.
The RICS house price index, however, fell further into negative territory, dropping to -19 from -17 in June. Despite this, RICS survey participants expressed increased optimism, with near-term price expectations reaching their highest level in over two years in July.
Many prospective property buyers and sellers have been waiting for a drop in interest rates, and it seems that moment is finally arriving. In July, new buyer enquiries saw an uptick according to HSBC, while new seller instructions also returned to growth after a turbulent June.
Although mortgage affordability remains tight, further rate cuts are likely on the horizon. Financial markets are expecting an additional 0.5% cut this year, followed by a 1% reduction next year.
The latest RICS survey indicates that with the election out of the way, the housing market is regaining momentum. Demand increased in July, and this positive trend is expected to continue as Labour keeps housing in focus and mortgage rates begin to fall, according to RBC analyst Anthony Codling.
AJ Bell analyst Russ Mould added that investors believe a gradual recovery in the UK housing market is now underway.
However, Sam Mitchell, CEO of Purplebricks, cautioned that the situation remains challenging for renters and first-time buyers. While the Bank of England’s interest rate cut has boosted confidence in the housing market, the rental sector is still in disarray, and the outlook for prospective homeowners is not yet entirely positive.
