The average price of a UK property coming to the market in July dropped by 1.2% to £373,709 in the largest monthly price drop at this time of year recorded in over 20 years of data, as new sellers lower their price expectations, according to Rightmove (RMV.L).

According to the property site, this month’s price drop of £4,531 comes as sellers lower expectations to catch buyers' attention amid a high supply of homes for sale.

London, the country's largest regional market, leads the charge in price reductions with an overall drop of 1.5%, driven largely by Inner London, where prices fell by 2.1%. This market shift comes as sellers in the capital react to external factors, including changes to stamp duty and tax rules, while also trying to compete for the growing pool of potential buyers.

Despite the price reductions, buyers are still active, with the number of sales agreed up 5% compared to this time last year. Furthermore, inquiries from potential buyers are 6% higher than in 2023, indicating continued demand. At the same time, affordability is improving for many buyers, helped by lower mortgage rates and rising wages.

“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," Colleen Babcock, property expert at Rightmove (RMV.L), said.

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"The decade-high level of buyer choice means that discerning buyers can quickly spot when a home looks over-priced compared to the many others that may be available in their area. 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," she added.

The national drop of 1.2% in July is the largest price fall recorded at this time of year in over two decades of Rightmove (RMV.L) data, as high level of housing supply and the summer holiday season have made the market more competitive. Rightmove said sellers have been forced to become more agile in their pricing strategies, given the oversupply of homes available for sale.

“It’s been a promising first half of the year for activity levels, particularly when you consider that some will have brought their plans forward to try to avoid added stamp duty from April," Babcock said.

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"Even after the stamp duty deadline, we’re seeing more sales being agreed and more new potential buyers entering the market than at the same time last year. Still, the knock-on effect of high buyer choice is slower price growth, so we’re revising down our prediction of how much the asking price of a home will increase over the whole of the year," she added.

Rightmove’s (RMV.L) revised property price forecast for 2025 now suggests that prices will rise by just 2% instead of the earlier forecast of 4%. The high supply of homes on the market continues to cap significant price growth, but the positive momentum in buyer activity means that prices are still expected to edge up modestly.

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Mortgage affordability is also improving. Rightmove’s (RMV.L) mortgage tracker showed that the average two-year fixed mortgage rate has fallen to 4.53%, compared with 5.34% this time last year. This drop, combined with average wage growth of over 5%, means that many buyers are saving around £150 per month on a typical mortgage, creating more room for purchasing power.

Looking forward, Rightmove (RMV.L) is maintaining its forecast of 1.15 million property transactions in 2025, as the current market remains active. If the Bank of England cuts rates twice more this year, as is expected, this could further encourage buyer demand and push affordability in the right direction.

“Looking ahead to the second half of 2025, there will still very likely be the usual quieter seasonal periods around the summer holidays and Christmas, but we expect market activity to continue to be resilient. Crucially, buyer affordability is heading in the right direction, and another two bank rate cuts before 2026 would be a big boost to this,” said Babcock.

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