House prices drop by £4,500 in biggest July dip ‘in at least 20 years’ (Image: Getty)
The average asking price for a home entering the market has dropped by more than £4,500 this month, marking the largest July price decrease recorded in at least two decades, according to property website Rightmove.
Across Britain, the average asking price in July stands at £373,709, indicating a £4,531 or 1.2% decrease month-on-month, Rightmove said. While a seasonal dip in house prices is common in July, this represents the most significant monthly price drop at this time of year recorded by Rightmove in over 20 years of data collection. Rightmove has also revised its house price forecast for 2025, reducing the predicted growth from 4% to 2%. The website attributes this to a high level of seller competition, which is restricting price growth.
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The cost of an average home in the UK has experienced the biggest price drop in July in 20 years (Image: Getty)
However, it maintains its prediction of 1.15 million transactions for this year.
London, particularly inner London, has been a key contributor to the decline in asking prices among new sellers, according to Rightmove. Price tags across the capital have fallen by 1.5% month-on-month, with an average price drop of 2.1% in inner London.
The increase in stamp duty in April has had a particular impact in London, where property prices are higher, the website added.
In contrast, the north east of England has seen a 1.2% increase in prices month-on-month, continuing a trend of less expensive areas experiencing faster price growth, Rightmove noted.
Summer sellers typically need to work harder to attract the attention of distracted buyers.
Attractive pricing from new sellers is improving buyer affordability and enticing new buyers to make inquiries, the report concluded.
The report suggests that with mortgage rates on the decline and anticipation of two further Bank of England base rate cuts in 2025, the latter half of the year looks promising.
Lenders are revising their criteria, enabling some borrowers to secure larger loans. According to Rightmove’s mortgage tracker, the average rate for a two-year fixed mortgage has dropped to 4.53%, down from 5.34% the previous year.
Colleen Babcock, a property specialist at Rightmove, said: “We’re seeing an interesting dynamic between pricing and activity levels right now. The healthy and improving level of property sales being agreed shows us that there are motivated buyers out there who are willing to finalise a deal for the right property.
“What’s most important to remember in this market is that the price is key to selling.
“The decade-high level of buyer choice means that discerning buyers can quickly spot when a home looks overpriced compared to the many others that may be available in their area.
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“It appears that more new sellers are conscious of this and are responding to this high-supply market with stand-out pricing to entice buyers and get their home sold.”
Ms Babcock added: “Crucially, buyer affordability is heading in the right direction, and another two (Bank of England base rate) cuts before 2026 would be a big boost to this.”
Phillip Bishop, managing director at Perry Bishop in Cirencester, Gloucestershire, said: “We’re seeing significantly higher stock levels than a year ago, but mitigated in part by a good increase in buyer registrations and viewing levels compared with last year.
“Buyers are taking their time and viewing more before deciding, and the serious and motivated sellers are pricing sensibly and getting success.”
He added: “Rarely available properties are still receiving mass interest and multiple offers.
“The Cotswolds summer market can slow over the holidays, but we expect a second wave of serious buyer activity in the autumn, with serious motivated buyers wanting to agree on their purchase.”
Rightmove’s report coincided with property firm Hamptons revising its 2025 rental growth forecast for Britain from 4.5% down to 1.0%. The firm attributed this adjustment to a quicker-than-anticipated market deceleration.
Hamptons highlighted that the shift in demand from the rental sector to the sales market has been the main factor behind the cooling rental market.
With mortgage rates declining, homeownership has become more attainable, sparking robust first-time buyer activity, according to Hamptons.
The company noted that rents on newly let properties edged up by just 0.4% year-on-year across Britain in June, settling at £1,369 per month – marking the most sluggish growth since August 2020.
Aneisha Beveridge, head of research at Hamptons, said: “The rental market has softened more quickly than we anticipated towards the end of last year.
“What initially appeared to be a London-centric slowdown has now spread across the country, with rents declining in multiple regions and growth easing elsewhere.
“A combination of falling mortgage rates and a weaker labour market has shifted the dynamics – more affluent renters are becoming first-time buyers, while the economic slowdown is limiting what others can afford. That said, this isn’t the end of the rental growth story.”
She mentioned that a shortage of rental homes “remains unresolved,” and regulatory changes are likely to increase landlords’ costs, potentially restricting supply.
The Hamptons’ lettings index, which monitors rent fluctuations using data from the Connells Group, focuses on actual rather than listed rental prices.
Nathan Emerson, chief executive of Propertymark, commented: “We have seen encouraging signs from (Chancellor) Rachel Reeves’s Leeds Reforms, which are designed to potentially better help lenders serve those on lower incomes.
“However, such reforms alone will not help keep house prices manageable without the UK Government and the devolved administrations meeting their individual housing targets to keep pace with real-world demand.”
