July 2026 Housing Market Report: The Summer Slowdown
- House sales show a sharper summer slowdown, falling 9% year-on-year in July.
- Asking prices record an unusually large drop as buyers are distracted by the World Cup and record temperatures.
- The Bank of England holds the base rate at 3.75%, while high street lenders begin raising mortgage rates.
- Mortgage approvals for house purchases recover slightly to 58,200 in June.
- Prime Minister Andy Burnham announces plans to give regional mayors a share of income tax.
- Major UK housebuilders face a £4.5 billion class action lawsuit.
The scorching summer heat is doing more than just slowing down daily life; it perfectly mirrors a broader, deeper lull across the UK property market. Zoopla data confirms a sharper-than-usual seasonal deceleration, with agreed sales falling 9% year-on-year in the four weeks to 19 July. Compounding this trend, Rightmove recorded an unusually steep drop in asking prices for newly advertised homes in the lead-up to 11 July, as record temperatures and the World Cup provided an easy distraction for an already hesitant pool of buyers.
Nationwide's latest indexing aligns with this cooling trend; while average house prices rose marginally by 0.1% in July to £277,542, the annual rate of growth slowed to 1.8% (down from 2.2% in June). Zoopla’s Executive Director, Richard Donnell, cited "elevated mortgage rates and political uncertainty" as the leading causes holding back sales and giving buyers more negotiating power across the summer months.
We are seeing regions like London and the South East taking the biggest hits, showing significant asking price falls of £3,270 and £1,480 respectively as sellers are forced to adjust to the current borrowing environment.
Source: Richard Donnell, Executive Director of Zoopla
Whilst the national overview feels heavy, the regional picture tells a very different story. As we reported last month, market performance improves the further north you move, and with Prime Minister Andy Burnham pushing new regional tax powers, there is even more positive momentum heading that way.
Regional powers: income tax shifts for local housing
Prime Minister Andy Burnham has announced that mayors of England's city regions will receive a share of income tax revenue for the first time. This initiative is part of a wider plan to give devolved governments greater control over local services, including housing, transport, and skills.
Under the proposals, mayors will also retain some business rates raised in their areas. By keeping more locally generated revenue within the community, regional leaders will have the direct financial resources needed to build homes, create jobs, and stimulate local property markets, independent of central Westminster budgets.
Are we set for another stamp duty shake-up?
As the volume of new-build properties coming to market drops to its lowest level in nearly a decade, industry pressure is mounting on the Treasury to intervene. Property portal Rightmove has formally called for the permanent abolition of Stamp Duty Land Tax (SDLT) for all first-time buyers, alongside the launch of a new Help to Buy-style government equity loan scheme.
The proposal aims to tackle two distinct friction points currently paralysing the bottom of the property chain:
- Upfront affordability: Completely removing SDLT for entry-level homes would significantly lower initial transaction barriers, allowing buyers to allocate more capital toward their deposit and clear strict lender stress tests.
- Supply-side stagnation: Reintroducing a government-backed equity loan scheme would provide housebuilders with the guaranteed buyer demand required to restart stalled developments and reverse the decade-low pipeline of fresh inventory.
With major developers already constrained by high borrowing costs, slow planning permissions, and legal headwinds, market-led remedies are failing to restart site delivery. While Ministers face tight fiscal constraints ahead of the autumn statement, the message from the sector is clear: without targeted tax relief and structured equity support, first-time-buyer volume will remain severely constrained throughout 2026.
Mortgage rates and the geopolitical squeeze
Despite UK inflation falling to a 15-month low in June, driven by drops in transport and food costs, several big UK lenders began raising their mortgage interest rates this month. This marks a significant shift away from the downward pricing trends seen in the spring.
- Geopolitical Pressures: The recent resumption of hostilities in the Middle East has driven oil prices back up, reviving inflationary fears and pushing up swap rates.
- Energy Price Caps: The drop in inflation is expected to be short-lived, with gas and electricity price caps rising this month.
- Affordability Stress: As lenders hike rates back to levels seen a month ago, buyers are finding their purchasing power immediately compressed.
With inflation still above the 2% target, Chancellor John Healey noted that there is "much more to do" to address the ongoing cost-of-living challenges, which are keeping upward pressure on borrowing costs.
Will mortgage rates go down in autumn 2026?
The Bank of England opted to hold the base interest rate at 3.75% this month as the Monetary Policy Committee waits for a keener sense of how much the US-Iran war will push up long-term inflation. With fixed mortgage rates already recording their biggest daily jump since the spring and swap rates remaining highly volatile, a base rate cut in the immediate autumn months looks increasingly unlikely. Lenders are currently pricing in this sustained risk, which means borrowers should prepare for the cost of capital to remain elevated through to the end of the year.
The mathematical reality of the 3.75% base rate has officially caught up with the transaction pipeline. Until the geopolitical landscape stabilises, buyers must meticulously stress-test the true lifetime cost of their financing before entering a restrictive market.
CEO of SAM Conveyancing
The upcoming MPC announcements on Bank Rates are on 7 August, 18 September, 6th November, 18 December, 4 February 2027, and 18 March 2027.
Property prices and sales volumes
England & Wales
In May 2026, the average property price in England & Wales stood at £287,003, a 2.4% year-on-year increase from May 2025 (£280,290).
The average price for first-time buyers reached £240,306, reflecting a 2.5% annual increase. Meanwhile, owner-occupiers purchased at an average of £349,447, and cash buyers at £273,505. New-build properties commanded an average price of £390,836 in March 2026.
Completed sales volumes reflect a heavily suppressed pipeline as high borrowing costs bite. In March 2026, England & Wales recorded just 43,606 completed transactions in the Land Registry, representing a sharp drop-off in market velocity.
Mortgage Rates
While the Bank of England's official quoted household interest rates for June 2026 show a continuation of the downward pricing trend seen throughout the spring, borrowers must proceed with caution. As highlighted earlier in this report, the recent surge in swap rates triggered by geopolitical tensions means these quoted figures are rapidly being replaced by more expensive products on the high street.
Home Owners
For owner-occupiers in June 2026, average fixed rates saw monthly reductions of between 0.06% and 0.17% across the board. However, the premium on high-LTV borrowing remains steep, with 95% LTV products firmly above the 5% threshold.
2-Year Fixed Rates
- 60% LTV: 4.60%
- 75% LTV: 4.81%
- 85% LTV: 4.93%
- 90% LTV: 5.19%
- 95% LTV: 5.56%
5-Year Fixed Rates
- 60% LTV: 4.53%
- 75% LTV: 4.65%
- 90% LTV: 4.94%
- 95% LTV: 5.32%
For those looking to fix for longer, the 10-year fixed rate at 75% LTV stood at 5.18% in June.
Landlords
Buy-to-let products experienced a similar marginal easing in June. The 2-year fixed rate at 60% LTV saw the most notable month-on-month drop, falling from 5.04% in May to 4.76% in June.
2-Year Fixed Rates
- 60% LTV: 4.76%
- 75% LTV: 4.30%
5-Year Fixed Rates
- 60% LTV: 4.74%
- 75% LTV: 4.69%
Mortgage approval reports
Home buyers
In June 2026, net mortgage approvals for house purchases rose slightly to 58,200; a 2.9% increase from the 56,565 approvals recorded in May 2026. However, this figure remains 10.0% lower than the 64,664 approvals seen in June 2025.
While there is a marginal monthly recovery from May's deep trough, the overarching annual contraction confirms that aggressive lender fee structures and the 3.75% base rate are continuing to compress the buyer pipeline and choke off transactional velocity.
Remortgages
Remortgage approvals stood at 34,171 in June 2026. While this represents a slight 1.0% increase from 33,828 in May 2026, it marks a severe 19.3% year-on-year decline from 42,348 in June 2025.
This sustained freeze indicates that the heavy wave of refinancing has stalled. A large number of legacy borrowers are hitting strict underwriting caps, forcing them to hold off or switch to standard variable rates rather than take on punitive new fixed terms.
1 million homeowners face a surge in mortgage costs
The Bank of England has warned that up to 1 million UK homeowners face a sharp increase in their monthly borrowing costs as global conflict directly impacts product pricing (The Telegraph). As geopolitical tensions in the Middle East drive up oil and energy costs, wholesale swap rates, which lenders use to price fixed-rate mortgages, have surged.
This rapid shift in the wholesale market has abruptly ended the competitive rate cuts seen earlier in the spring. Several high street lenders have responded by hiking fixed rates back to levels seen a month ago, leaving roughly a million households whose fixed-rate deals expire this year with significantly fewer low-cost refinancing options.
For buyers and existing borrowers rolling off historically lower fixed terms, this creates an immediate refinancing shock. Instead of transitioning to cheaper deals, households are forced to absorb substantially higher monthly repayments, placing additional strain on mortgage affordability stress tests across the market.
Lowest new build completions since lockdown
Housing completions saw a marginal uptick in the final quarter of 2025, ending five consecutive quarters of stagnation. However, with a Government-set target of 300,000 new homes a year (equating to 75,000 per quarter), the 29,700 new builds completed by private enterprise remain severely suppressed.
Worryingly, this sluggish pipeline is expected to slow further in the wake of the £4.5 billion class action lawsuit against the sector's largest developers, making the national housing targets increasingly difficult to achieve.
£4.5bn class action lawsuit against housebuilders
Several of the UK's largest building companies are currently facing a £4.5 billion class action lawsuit over allegations of anti-competitive practices and artificially inflating prices for homebuyers.
As major developers inevitably divert capital and resources to navigate this unprecedented legal challenge, we anticipate a further slowdown in site delivery. This will heavily constrain fresh new-build inventory across the rest of the year, exacerbating the existing supply-and-demand imbalance.
Where is the opportunity in today's market?
While headline figures reflect a cooling summer pace, savvy buyers and sellers are using current conditions to their advantage:
- First-Time Buyers: High stock levels and softer asking prices mean you have maximum negotiating leverage and less risk of bidding wars.
- Up-Sizers: In a cooling market, the gap between the price of your current home and your larger dream home narrows, saving you money on the overall upgrade.
- Cash Buyers & Investors: Less reliance on mortgage finance allows cash buyers to secure significant discounts from motivated sellers seeking speed and certainty.
Andrew Boast FMAAT
CEO of SAM Conveyancing
Housing Market opinion
We called the shift to a buyer's market months ago, and this summer slowdown has only solidified it. With transaction velocity cooling and asking prices coming under pressure—particularly across London and the South East—buyers currently hold all the negotiating leverage.
However, with the Bank of England holding the base rate at 3.75% and wholesale swap rates surging on geopolitical tensions, autumn rate cuts are off the table. As 1 million homeowners prepare for a refinancing shock this year, realistic pricing upfront is the only way sellers will avoid getting trapped in pooling inventory.
Sources: Latest data from HM Land Registry, Bank of England, ONS, Zoopla, Rightmove, Nationwide, and Propertymark (NAEA).
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