UK housing market gains after rate cuts

Rental inflation cools to 5.9% in July, with average rent hitting £1,343 a month.

UK housing market gains after rate cuts

House prices rose 3.7% year on year in June, lifting the average to £269,000 according to the Office for National Statistics. The gain follows a run of Bank of England rate cuts and the unwinding of distortions from April’s stamp duty holiday, with buyers rushing to complete purchases before the tax move ended.

Private rents cooled for the seventh month in a row, with annual rent inflation easing to 5.9% in July and the average private rent at £1,343 a month. London remains the most expensive rental market at about £2,250, while the northeast posted the fastest rent growth at 8.9% year on year. The northeast still has the lowest average rents at around £736 a month, and London’s rents show 12‑month inflation of about 6.3% to July.

The data suggest rate cuts are nudging demand back into play, but the affordability gap remains large for many households. Ending the stamp duty distortions from April removes a one-off market boost, yet price momentum could persist if borrowing costs stay low and supply stays tight. The different rhythms in buying and renting point to a market split: price gains in some regions while rent pressures remain more persistent in city hubs.

Rents tell a separate story from prices. The cooling rent inflation offers relief to some renters, but the strongest growth is in areas with high demand, such as the northeast, while London remains costly. Policy shifts, wage trends, and housing supply will determine whether the current mood holds or gives way to renewed headwinds for buyers and renters alike.

Highlights

The housing picture is shifting, not settled, as policy and prices wrangle with real-world affordability.