The North West saw significantly above-average growth of 3.1% to £210,100, second to table-topping Northern Ireland at 5.4%.
As Scotland secured third place with 2.8% growth to £176,400, the North East followed with a 2.5% rise to £151,800.
The South and East of England reported only decreasing house prices, as London bottomed out at minus 1% to £525,400.
Liverpool and Newcastle were the English regions with the strongest growth. With a 4.2% rise in house prices for Liverpool, the average property value was £171,700. Meanwhile, Newcastle saw a 3% growth to £165,200.
Emma Cox, managing director of real estate at Shawbrook, said: “A slight downturn in house prices to 0.9% reflects a market that’s continuing to adjust to cumulative regulatory changes and broader economic shifts. Buyers are still constrained by affordability and mortgage costs, leaving many to hold off on any action until conditions settle.”
Episode 1: First-time buyers : Powered by Partnership podcast from Newcastle for Intermediaries
Sponsored by Newcastle for Intermediaries
Extra stress on cash-heavy deposits
Buying power was 9% weaker in July compared to January, as mortgage rates continued to increase.
With average mortgage rates rising from below 4% in January to close to 5% today, Zoopla said buyers may respond by opting for lower-priced homes or increasing their deposit sizes.
However, the ability to increase deposits varies significantly across the country. Regional differences in house price inflation mean buyers in Southern England need to find substantially more cash upfront than those in lower-priced regions.
Zoopla itself said buyers would need an average additional deposit of £18,200 to purchase the same home while keeping monthly mortgage repayments unchanged. The extra deposit averaged at £35,500 in London compared to £10,200 in the North East.
First-time buyers have resorted to lengthier stays with parents to save for deposits. Property prices and deposit costs were shown to be chief worries among first-time buyers.
Nathan Emerson, CEO of Propertymark, said: “Affordability remains the key constraint. Higher mortgage rates are reducing buying power, while the additional £18,200 deposit needed to maintain repayments highlights the particular challenge facing first-time buyers.”
Improved housing stock but sales decline
Buyer activity was slower over the summer, with sales 6% lower year-on-year, although the gap to last year’s levels is beginning to narrow as demand picks up.
Meanwhile, sellers continue to bring properties to market, with housing stock 5% higher than a year ago.
Richard Donnell, executive director at Zoopla, commented: “Average mortgage rates have stabilised but remain closer to 5% than 4%, meaning affordability remains an important factor for many homebuyers choosing their next home. Buyers have plenty of choice this autumn and will be able to make competitive bids for homes.”
