Home prices experienced a 0.8% increase in July, and experts predict further elevation following the interest rate reduction.

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In the latest housing market update, various regions across the UK have seen growth in property prices. The Nationwide house price index revealed a 0.3% monthly increase in house prices, translating to a 2.1% annual growth.

The South West continues to hold the highest average property price, standing at £301,359, with a modest 1.1% annual increase. Meanwhile, Northern Ireland continues to record the strongest property price growth in the UK, with an impressive 5.8% annual increase, making the average property price in Northern Ireland £195,681.

Wales also saw a significant jump in house prices, growing 3.4% annually to £221,102, the highest price seen since October 2022. House prices in the North West also recorded strong growth, with an annual increase of 4.1%, making the average property price in the North West £232,489.

In contrast, Eastern England experienced a slight dip, with a 0.4% annual decrease in property prices, making the average property price £330,282. London continues to have the most expensive property prices in the UK, with an average home costing £536,052, up 1.2% compared to last year.

Scotland and the West Midlands also saw annual increases of 2.1% and 1.8% respectively, with average property prices of £205,264 and £253,649 respectively. The South East and the East Midlands recorded annual increases of 1.3% and 0.6% respectively, with average property prices of £386,468 and £239,448 respectively.

The only region to record a fall in house prices was Yorkshire and Humber, with a 1.8% annual decrease, making the average property price £206,480.

Recent changes in interest rates may impact the housing market. The Bank of England base rate was cut from 5.25% to 5% last week, with further cuts expected. This could potentially lead to more affordable mortgage rates, as demonstrated by Nationwide offering a 3.99% mortgage to some property buyers.

The first Budget of the new Labour government is expected to be announced on October 30. Speculations suggest that the government may announce housebuilding initiatives, sweeteners for first-time buyers, and tax changes that affect buy-to-let investors.

Rachel Reeves, head of the Labour government, may also boost the capital gains tax rate to match income tax, which could potentially cause some property investors to sell before any potential change comes in, potentially creating a glut of property for sale and keeping prices down.

Looking ahead, experts have predicted the strongest growth rate in UK house prices in 2025 will be in Northern Ireland with an annual increase of 8.1%, followed by Scotland at 4.9%, while other regions like the Southwest are seeing declines and London shows moderate growth of 0.8%.

Amanda Bryden, head of mortgages at Halifax, anticipates house prices to continue a modest upward trend throughout the remainder of 2024. However, the potential increase in capital gains tax and changes in the housing market could influence these predictions.

Home prices experienced a 0.8% increase in July, and experts predict further elevation following the interest rate reduction.