UK house prices flat at 0.1% on Iran rate fears
UK house price growth ground to a near-halt in July as the Iran war drove interest rate volatility, forcing Taylor Wimpey to downgrade its construction targets.
UK house prices rose just 0.1% in July, leaving the average property at £277,542. The monthly increase follows a decline from May, when prices exceeded £278,000, pushing annual growth down to 1.8% from 2.2% in June.
The stagnation during the traditional peak buying season stems from macroeconomic turbulence. The Bank of England held rates at 3.75% on Thursday but cautioned that an escalation in the Iran war could push inflation above 4% next year. Robert Gardner, chief economist at Nationwide, said: "Geopolitical tensions remain high, with the conflict between Iran and the US again exerting upward pressure on energy prices and market interest rates in recent weeks."
This uncertainty is skewing market expectations for the central bank's future trajectory. Gardner noted that "Financial market expectations for the future path of Bank rate have been volatile, reflecting shifting views about the inflationary implications of events at home and abroad."
The pressure is translating into weaker corporate performance. Taylor Wimpey warned of challenging market conditions as it reported first-half results, citing softer buyer demand alongside rising construction costs. The builder now expects to complete between 10,600 and 10,800 homes this year, pulling its guidance to the bottom of its March range.
Estate agents are feeling the shift in bargaining power. Amy Reynolds, head of sales at Antony Roberts, said: "In our offices, prices remain flat with sensible offers being accepted. There are more sellers than buyers, but sellers aren’t panicking – asking prices are coming down, but a lot of that is simply initial overpricing meeting the time it takes to find the market level."
Low transaction volumes are partly structural. Government data shows outright homeowners have lived in their properties for an average of nearly 24 years, compared to nine years for those with mortgages. Nationwide suggested this ties into an ageing population, reducing the natural turnover of housing stock.
Despite the price plateau, underlying market churn persists. “The moves between tenure types are still significant,” Gardner said. “Nearly 200,000 households previously in the private rented sector became owner occupiers in 2024-25. But there is also a return flow, with about 100,000 households moving into private rented properties having previously been owner-occupiers.”
