UK House Prices Experience Largest Monthly Drop in Two Decades

In July 2025, the average asking price for homes in the UK fell by 1.2%, marking the steepest monthly decline in over 20 years, according to data released by Rightmove. This decrease, amounting to £4,531, brought the average asking price to £373,709. The decline has been attributed to the expiration of temporary stamp duty reductions and an influx of homes entering the market, as reported by Joanna Partridge in The Guardian on July 21, 2025.

The housing market typically sees a seasonal dip in prices during July, coinciding with the onset of the summer holiday season. However, the current drop stands out as the most significant recorded since Rightmove began its index in 2002. Colleen Babcock, a property expert at Rightmove, emphasized the importance of competitive pricing in a market where buyer options are at a decade-high. "What’s most important to remember in this market is that the price is key to selling," Babcock stated, highlighting the need for sellers to attract discerning buyers amid abundant choices.

The decline in asking prices was particularly pronounced in London, where new seller prices dropped by 1.5%, with inner London recording a steeper fall of 2.1%. The end of temporary stamp duty cuts, which had been in place since April 2025, has notably impacted the London market, where property values tend to be higher. The chancellor, Rachel Reeves, announced these cuts in her October budget, and their cessation has led to increased council tax on second homes, further constraining price growth.

Despite these challenges, the number of property sales has continued to rise year-on-year, suggesting that lower asking prices are enhancing affordability for prospective buyers. In fact, the latest figures indicate that average asking prices are only marginally higher than they were a year prior, by just 0.1%.

Additionally, the dynamics of the market are shifting favorably for buyers, as average wage increases are now outpacing both house prices and inflation. The number of property sales agreed upon is up by 5% compared to the previous year, with inquiries from potential buyers to estate agents increasing by 6%.

In light of these developments, Rightmove has revised its property price forecast for 2025, now predicting a more modest rise of 2% instead of the previously anticipated 4%. The reduction in mortgage rates is seen as a stabilizing factor, with the average two-year fixed mortgage rate currently at 4.53%, a decrease from 5.34% a year earlier. This equates to a monthly saving of nearly £150 for a buyer purchasing a home at the average asking price.

Looking ahead, analysts remain cautiously optimistic about the housing market's trajectory in the latter half of 2025. Expectations are that the Bank of England may implement two further interest rate cuts, which could further enhance buyer affordability. As the market adapts to changing economic conditions, the interplay between increasing inventory, price adjustments, and mortgage rate trends will be pivotal in shaping the housing landscape in the UK.