UK house prices rise 3.7% year on year in june, rents ease to 5.9%

UK house price inflation accelerated in June, with average prices up 3.7 percent from a year earlier, the Office for National Statistics reported on Wednesday. The increase compares with 2.7 percent in May, while private-sector rents rose 5.9 percent in July, the smallest annual rise since January 2023, suggesting tentative easing in rental pressures.

The ONS said house price growth had peaked at 5.5 percent in March ahead of the expiry of a property tax break, before slowing and then re-accelerating in June. The reversal reflects a mix of base effects and stabilising mortgage costs through spring, according to market participants. “British house prices in June were 3.7% higher than a year earlier,” the ONS release stated, highlighting the latest trend in the official index.

While the rekindling of price growth may encourage some homeowners, affordability remains stretched relative to incomes. Mortgage approvals have been sensitive to gilt moves and swap pricing, with lenders adjusting products as rate expectations shift. The inflation backdrop is pivotal, after CPI rose to 3.8 percent in July and services inflation hit 5.0 percent, metrics that influence the path of borrowing costs and housing demand.

Regional dynamics vary, with London’s prime segments still influenced by international demand and the rest of the country shaped by domestic affordability and supply constraints. The rental market shows early signs of cooling, which may relieve some pressure on household budgets if sustained. Policymakers and lenders will monitor whether easing rent inflation and steady mortgage pricing can balance the market into autumn.

The next catalysts for housing will be mortgage rate trends and any policy guidance from the Bank of England. For now, the official data depict a market that has regained some momentum while rental cost growth decelerates from recent peaks.