UK house prices showed signs of renewed momentum in July 2025, with annual growth edging up to 2.4 percent from 2.1 percent in June, and a monthly rise of 0.6 percent. Encouragingly, affordability has improved. The house price-to-earnings ratio now stands at approximately 5.75, the lowest in over a decade and a notable shift from the 2022 peak of 6.9. This drop, combined with income growth and softening mortgage rates, is making homeownership more attainable.

Mortgage approvals have remained resilient, June's 64,200 approvals mirror pre-pandemic levels, despite higher borrowing costs. Typical five-year fixed rates (4.3 percent) have fallen from their late-2023 highs, though they remain well above 2021 lows. Importantly, the availability of higher loan-to-value mortgages is helping buyers with lower deposits.

The improving affordability, low unemployment, and real wage growth suggest underlying strength in the housing market. If the Bank of England eases interest rates further as expected, and the broader economic recovery continues, the housing sector is likely to gain momentum in the coming months. While global uncertainties linger, current domestic conditions offer cautious optimism for UK buyers and sellers alike.

The Nationwide House Price Index (HPI) provides house price information derived from Nationwide lending data for properties at the post survey approval stage. Nationwide house prices are mix adjusted; that is, they track a representative house price over time rather than the simple average price.

Home values affect much in the economy especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.

Although the Nationwide data are calculated similar to the Halifax method Nationwide substantially updated their system in 1993 following the publication of the 1991 census data. These improvements mean that Nationwide's system is more robust to lower sample sizes because it better identifies and tracks representative house prices. Historically, the data go back to 1952 on a quarterly basis and 1991 on a monthly basis.

Over long periods the Halifax and Nationwide series of house prices tend to follow similar patterns. This stems from both Nationwide and Halifax using similar statistical techniques to produce their prices. Nationwide's average price differs because the representative property tracked is different in make up to that of Halifax.