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The UK housing market gained a little momentum through July, suggesting demand has held up despite the volatility generated by the end of the stamp duty holiday. House prices climbed 0.6% during the month, bringing the annual rate of growth to 2.4%, up from 2.1% in June, Nationwide this morning.

That follows Bank of England , published on Tuesday, showing lenders approved 64,200 mortgages to purchasers in June, which is up by 900 on the previous month and broadly in line with the 66,000 or so approvals we saw in the run up to the pandemic. 

While this isn't exciting, it is a pattern we'd expect as policymakers gradually loosen monetary policy. As the Nationwide release notes, housing affordability has been steadily improving, thanks to a period of strong income growth, more subdued house price growth and a modest fallback in mortgage rates. While the price of a typical UK home is around 5.75 times average income, this ratio is well below the all-time high of 6.9 recorded in 2022 and is currently the lowest this ratio has been for over a decade.

Near-continuous overshoots

Whether the market really begins to gather steam is in the hands of the Bank of England's Monetary Policy Committee. Inflation has surprised on the upside recently, even as the labour market has weakened, and many economists now expect a during the August 7th vote on interest rates.

Still, a cut is the likely outcome; an 83% majority of economists by Reuters last month expect two more 25-basis-point cuts this year, in August and November, maintaining the pace of one per quarter. That would bring the base rate at 3.75% at the year end, with another two reductions expected in 2026. 

But analysts at institutions including HSBC now expect the annual rate of inflation to rise to 4% this year before subsiding: "Six years of near-continuous inflation overshoots cannot be ignored," Robert Wood and Elliott Jordan-Doak, economists at Pantheon Macroeconomics, said in a note published by Reuters. They think a cut next week would mark the end of the BoE's loosening cycle as inflation remains above target right through both 2026 and 2027. The Bank's current forecasts suggest inflation will fall a shade below target in early 2027 – we'll get an updated set of numbers alongside next week's decision.

Third fastest

The Autumn Budget looms large, of course. "Damaging speculation around tax rises in the lead-up to the 2024 budget caused many firms to pause investment and hiring decisions," Anna Leach, chief executive at the Institute of Directors (IoD) this week. 

There are good reasons to think this will happen once more, further weakening the jobs market and perhaps tipping the balance in favour of rate cuts. Sentiment among company directors is absolutely dire; the IoD's index tracking optimism in the economy slid to -72 in July from -53 in June, the worst reading since the research started exactly nine years ago. Tax and the cost of employment were the main issues raised regarding the government by the survey of 894 finance directors.

Still, it could be worse, given the threats posed by US tariffs only a few months ago. The International Monetary Fund (IMF) its growth forecasts for the UK earlier this week - it reckons we'll see 1.2% in 2025 and 1.4% in 2026, making the UK the third fastest growing economy in the G7, behind the US and Canada. 

Standing stock

Investors spent just shy of £830 million on UK purpose-built student accommodation in the second quarter of 2025, taking half year investment volumes to about £1.6 billion, according to new 51ÂÒÂ× figures. That's ahead of the long run average of £1.1 billion.

Despite the healthy turnover, the market faces challenges on several fronts. Significant delays at the Building Safety Regulator as a result of Gateway 2, planning challenges and high build costs are all having an impact on land sales and forward fundings. As a result, appetite from investors has shifted to standing stock as a first preference. For these deals, fire safety is elongating deal times, while a later leasing cycle this year is contributing to a more cautious market, particularly for stock in secondary locations. Prime assets in Russell Group cities, or assets and portfolios where investors can see a genuine value-add opportunity continue to attract high levels of interest and strong bidding activity. 

Several schemes and portfolios currently on the market or under offer, together totalling nearly £2 billion in value, which points to a much stronger second half of the year for investment. Appetite remains strong and we've seen several new market entrants this year, including AustralianSuper and CVC DIF. While the outlook remains far from certain given recent weaker economic data, further falls in the cost of debt have the potential to shift the investment and funding landscape, particularly for global players.

In other news...

Jay Powell strikes hawkish tone as Federal Reserve defies Donald Trump’s calls for rate cut (), Heathrow ‘ready to start mobilising’ as it unveils £49bn expansion plan (), and finally, rising rents across London’s tourist heartlands pushed up the value of Shaftesbury Capital Plc’s portfolio ().