By Amber Murray

Copyright cityam

House prices ticked up in July as Brits still showed a ‘good appetite’ for home ownership despite affordability challenges and uncertainty ahead of the Autumn Budget.

Average house prices increased 2.7 per cent to £292,000 in England, two per cent to £209,000 in Wales, and 3.3 per cent to £192,000 in Scotland in the 12 months to July 2025, according to the ONS.

Jason Tebb, president of OnTheMarket, said the market is demonstrating “remarkable resilience… assisted by five interest rate reductions in the past year and the expectation of more to come”.

However, higher-than-expected inflation fuelled by high food and services costs.

“At 3.8 per cent inflation is way above the Bank’s target and prices are expected to keep rising in the near term,” Danni Hewson, head of financial analysis at AJ Bell, said.

“Looking further down the track, markets are hedging their bets on the potential for one final interest rate cut in 2025 as labour market weakness begins to impact remuneration decisions.”

This is likely to dampen housebuying activity in the latter months of the year as mortgages remain higher than buyers would like.

“The expectation is that interest rates will be held tomorrow,” CEO of Octane Capital, Jonathan Samuels, said.

“Whilst this won’t light the touch paper in terms of driving buyer activity, it will bring reassurance in the short term by providing ongoing certainty,” he added.

Uncertainty ahead of Budget

Property analysts have predicted a slowdown in buying activity as Brits hold off on purchases as they wait to see what property taxes or relief the Autumn Budget might hold.

“We may see a momentary dip as the nation’s homebuyers hold off in the hope of a stamp duty shake-up,” CEO of Yopa, Verona Frankish, said.

Rumors about property taxes swirled at the end of the summer, with the Treasury reportedly considering a range of proposals to help plug a £40bn black hole in the public finances.

A selling tax on large homes, an annual property tax to replace stamp duty, and higher tax on landlord’s rent income have all been floated.

Jonathan Hopper, CEO of Garrington Property Finders, said: “On the property front line, we are seeing a two-speed market emerge.

“Those who need to move are pressing ahead but negotiating hard to de-risk themselves from potential tax changes in the November Budget, while discretionary movers are adopting a wait-and-see stance, using the uncertainty as an excuse to pause.

Barratt Redrow also flagged the “additional risk” to housing demand from uncertainty around property taxes in the upcoming budget in its latest results.

“[Current selling expectations] assumes a normal autumn selling season.. [but] related uncertainties [ahead of the Budget] around general taxation and that applicable to housing, has introduced additional risk”.

London trails UK market

Annual house price inflation was lowest in London, at 0.7 per cent, in the 12 months to July 2025. This was down from 0.9 per cent in the 12 months to June this year.

House price inflation in the capital has been stymied by its unaffordability compared to other areas of the country, as well as lower levels of investment.

Buyer affordability in the capital is already dire: London has a house price to earnings ratio of 8.22, making it one of the least affordable places to live in the country, against a national ratio of 6.55.

Director of Benham and Reeves Marc von Grundherr, however, noted that “it’s important to remember that even marginal percentage increases in the capital translate into far greater sums on the table for sellers.”

“So whilst a more muted performance may come as cause for concern for the capital’s home sellers, this continued growth underlines London’s status as the nation’s most resilient property market.”