The UK housing market in July 2025 has taken a sharp turn, registering the steepest monthly decline in asking prices in over two decades. According to data from Rightmove, the average asking price for newly listed homes fell by 1.2% – a drop of £4,531 – to £373,709 compared to the previous month. While a seasonal lull in activity is common during the summer, this fall marks the largest month-on-month decrease since Rightmove’s index began in 2002.

So, what’s behind the drop? And does it spell trouble – or opportunity – for buyers and sellers alike?

A Perfect Storm of Market Forces

Several factors have converged to put downward pressure on asking prices this July:

  • The end of temporary stamp duty cuts in England and Northern Ireland, which had incentivised buyers earlier in the year, officially ended in April following changes in the Chancellor’s October 2024 budget.
  • A sharp rise in available housing stock, with the number of homes on the market reaching a decade-high, giving buyers more choice and leverage.
  • Rising council tax on second homes, which is curbing demand among investors and holiday home buyers – particularly in premium markets like London and coastal or countryside areas.

Rightmove’s property expert Colleen Babcock noted, “What’s most important to remember in this market is that the price is key to selling. The decade-high level of buyer choice means that discerning buyers can quickly spot when a home looks overpriced.”

London and the South Hit Hardest

The capital saw some of the most significant declines, with average asking prices in London falling 1.5% overall – and 2.1% in inner London – compared with June. The phasing out of stamp duty discounts has had an outsized impact in these high-value markets, where even modest increases in tax translate into substantial additional costs for buyers.

Additionally, the increased taxation on second properties has made prime postcodes less attractive for buy-to-let investors and international buyers who once drove demand in the capital.

Market Activity: Slowing Down or Catching Its Breath?

Interestingly, despite the price drop, activity in the market remains resilient:

  • The number of agreed property sales is 5% higher than the same time last year.
  • Buyer enquiries to estate agents are up 6% compared to July 2024.

These trends suggest that while sellers are adjusting their expectations, buyers are still very much active, encouraged by improved affordability and falling mortgage rates.

A More Affordable Window for Buyers

Mortgage affordability has improved, offering a rare silver lining. The average two-year fixed mortgage rate now stands at 4.53%, down from 5.34% a year ago. For a home priced at the national average of £373,709, this equates to savings of nearly £150 per month – a significant boost for first-time buyers and growing families looking to upsize.

At the same time, average wage growth is outpacing both inflation and house price increases, helping to further ease affordability pressures and potentially increase buyer confidence heading into the latter half of the year.

What This Means for Buyers

For those looking to purchase property, the UK housing market in July 2025 presents a potentially advantageous moment:

  • There’s more choice than at any time in the past 10 years.
  • Sellers are more negotiable, especially as competition intensifies.
  • Lower mortgage rates and stable incomes are improving purchasing power.

Buyers who have been waiting on the sidelines may wish to move quickly before the expected interest rate cuts – anticipated later this year by the Bank of England—fuel a resurgence in demand.

What This Means for Sellers

If you’re selling, the message is clear: pricing strategically is essential.

With increased stock and buyer expectations rebalanced, overpricing will likely result in longer time on the market. Working with experienced agents and staging homes attractively are more critical than ever.

That said, the underlying fundamentals of the market remain strong. Properties in desirable areas, priced correctly, are still selling – and often quickly.

Outlook for the Second Half of 2025

Rightmove has revised its full-year forecast for house price growth, now predicting a 2% rise in 2025, down from earlier expectations of 4%. However, this adjustment reflects a stabilising market rather than one in decline.

Falling mortgage rates, possible interest rate cuts, and sustained buyer interest suggest that the UK housing market in July 2025 may simply be recalibrating after the heat of previous years.

As we move into autumn, we may see a renewed sense of balance, one that rewards both realistic sellers and value-driven buyers.

Need Support with Your Next Move?

Whether you’re navigating the market as a buyer or preparing to sell, Doree Bonner International can support you with a seamless moving experience.

With over 100 years of expertise in removals, logistics, and storage, we’re trusted by homeowners, businesses, and relocation agents across the UK and abroad. From packing to delivery – and everything in between – we make moving easier, even in uncertain markets.

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