Experts forecast the market to continue to rebound this year after the Bank of England cut interest rates for the first time since 2020 this month.
The cut, from 5.25pc to 5pc, triggered a string of mortgage rate cuts, with almost all major high street banks now offering sub 4pc deals.
Sara Palmer of broker The Mortgage Lender, said: “Summer months typically see high levels of activity within the property market, and this is reflected in the further uptick, albeit slight, in house prices in June.
“Optimism across buyers and sellers alike appears to be growing, however, with the general election and the recent base rate cut sparking optimism amongst home buyers.”
But the rise in the inflation rate in the year to June published on Wednesday – the first since December 2023 – could dampen buyer confidence, as uncertainty lingers regarding further Bank Rate cuts in the near future.
Jeremy Leaf, former chairman of the Royal Institution of Chartered Surveyors, said: “The slight uplift in the latest inflation figures is unlikely to knock the interest rate reduction strategy off course, but will have some impact on confidence as it is likely that the pace may slow a little, leaving the market to find a new level.”
Elliott Jordan-Doak, senior UK economist for Pantheon Macroeconomics, said despite increases, lower mortgages should boost demand in the coming months.
“The typical two-year fixed-rate mortgage interest rate fell to 5pc in July, and will fall to 4.3pc by the end of the year if market pricing for MPC (Monetary Policy Committee) rate cuts is right.”
Meanwhile, private rents across the country jumped 8.6pc in the year to July, averaging £1,319, according to the ONS’s estimates.