The average asking price for a home in the UK has registered its sharpest monthly decline in over 20 years, according to new data from property platform Rightmove, as rising mortgage rates and weakening buyer confidence continue to weigh on the housing market.
Steepest July decline since records began
Asking prices for properties listed in July dropped by an average of 1.9%, equivalent to more than £7,000, marking the largest monthly fall since Rightmove began tracking such figures in 2001. The decline stands out not only for its scale but also because July is typically a month of relative stability, with families making summer moves before the new school year.
Higher borrowing costs dampen demand
The fall is being attributed primarily to higher mortgage rates, which have eroded affordability across nearly all income brackets. Although inflation has eased slightly in recent months, expectations that the Bank of England will keep interest rates elevated into 2026 have deterred many potential buyers. Lenders have responded by tightening criteria and reducing loan-to-income ratios, further constraining demand.
Sellers forced to adjust expectations
Estate agents report that sellers are increasingly having to lower their price ambitions to attract interest. Many of those who initially listed homes at optimistic prices in the spring have now had to make sharp reductions, particularly in London and the South East. Analysts suggest the market is entering a phase of ‘repricing realism’, with sellers more attuned to what buyers can actually afford in a high-rate environment.
Regional divergence widens
While the national average has fallen, there are sharp variations between regions. Northern England and Scotland have seen more resilience, with smaller declines or even flat pricing in some urban centres. In contrast, commuter belts around London have been particularly hard hit, reflecting their high price bases and greater exposure to rate-sensitive buyers.
Implications for the broader economy
The drop in asking prices will be closely watched by policymakers, as housing remains a key indicator of economic sentiment. A sustained correction could weigh on household wealth and consumption, though some economists argue it could also bring prices closer to income levels, improving affordability for first-time buyers. Construction activity may also slow in response to softer valuations, affecting employment and investment in the sector.
Outlook remains uncertain
Despite the sharp monthly decline, experts are divided on whether the fall signals a temporary adjustment or the start of a broader correction. Much will depend on the Bank of England’s next steps, inflation trajectories, and global financial conditions. For now, both buyers and sellers appear to be recalibrating expectations amid a shifting economic landscape.
REFH – Newshub, 21 July 2025
