UK House Price Growth Slows as Rental Costs Climb

House price inflation decelerated as the average monthly private rent in the UK surged to £1,393 in July. Consumer Prices Index (CPI) inflation also accelerated, hitting 2.9% in July, an increase from 2.6% in June.

Aimee North stated that annual UK house price inflation slowed significantly in June because price growth was weaker this summer than it was last year following stamp duty changes in England and Northern Ireland. In Northern Ireland, however, the average house price surged to £202,000 in the second quarter of 2026.

Prices in the North West and North East of England are reportedly up by 4.7% and 4.3% respectively. Conversely, London's average property value has reportedly fallen by 2.5% over the last year, marking the 10th consecutive month of annual declines in the capital, primarily due to decreases in inner London.

Mortgage rates have increased. Ian Futcher affirmed that mortgage rates will continue to be the key driver of the housing market, adding that if lender competition persists and borrowing costs gradually ease, activity should remain supported, but a swing in the opposite direction could see the market stall once again.

David Hollingworth noted that the increase in inflation was largely in line with market expectations. He also cautioned that a volatile backdrop remains, making it impossible to rule out more fluctuations in mortgage rates at this stage.

Jeremy Leaf confirmed that demand remains strong in the rental market, particularly for higher-end houses among those returning from holiday seeking accommodation before the new school term. Richard Donnell highlighted that people are renting for longer, which will support demand for rented homes and steady growth in rents, especially as the busy season approaches for students and new job seekers competing for a scarce supply of homes.

Nicky Stevenson emphasised that with homes taking longer to sell and more properties competing for buyers’ attention, realistic pricing is becoming increasingly important. Nathan Emerson observed that while short-term fluctuations are a normal part of the property market, they can influence confidence and lead some homeowners to delay decisions until there is greater certainty about the market's direction.

Iain McKenzie anticipates that activity will pick up in the autumn as the usual seasonal bounce returns, provided mortgage rates continue to ease and economic uncertainty does not intensify. He also projected that price growth is likely to remain modest for the rest of the year, with the market increasingly driven by affordability and local conditions rather than broad national momentum.