House price growth slows to 0.1%: Lloyds

UK house prices remained unchanged in July as higher mortgage rates and global economic uncertainty continued to constrain the market, according to the Lloyds House Price Index.

The average property price slipped by £143 to £299,253 following a 0.2% increase in June.

Annual price growth slowed from 0.7% to just 0.1%, its weakest rate since November 2023. Prices were also 0.3% lower on a three-monthly basis.

Lloyds said average prices have remained within a narrow range for almost two years and are only 0.5% higher than in November 2024.

NORTH-SOUTH DIVIDE CONTINUES

Northern Ireland remained the strongest-performing part of the UK, with annual growth of 7.4% taking its average price to £231,131.

Prices rose by 3.6% to £223,246 in Scotland and by 1.6% to £231,458 in Wales.

Within England, the North East recorded annual growth of 2.8%, with its average property price reaching £182,488. Prices in the North West increased by 2.1% to £247,836.

Southern markets remained weaker. Average prices fell by 2% to £381,146 in the South East and by 1.3% to £533,930 in Greater London.

MORTGAGE DEMAND REMAINS RATE-SENSITIVE

Mortgage approvals for house purchase increased by 2.9% to 58,200 in June, according to Bank of England figures. However, approvals remained 10% below the level recorded a year earlier.

HMRC data showed seasonally adjusted residential transactions edged 0.2% higher to 98,700 during June and were 2.5% above June 2025.

Amanda Bryden (main picture, inset), Head of Mortgages at Lloyds, said: “Affordability remains a challenge for many would-be buyers and, following recent events in the Middle East, mortgage rates have edged higher again after easing earlier in the summer.

“Sensitivity to borrowing costs is reflected in the latest industry data, which show a modest increase in both mortgage approvals and completed transactions in June following a bigger dip in May.”

She added that Lloyds expects activity and house prices to remain relatively stable over the remainder of 2026, with the outlook dependent on mortgage rates, inflation and household confidence.

INDUSTRY REACTION

Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau, said: “Today’s Lloyds House Price Index puts the average property at £299,253, remaining roughly the same month on month. But the monthly figure moves around for reasons that have nothing to do with the market – it’s the 0.1% annual increase that actually tells you what’s happening.

“For first time buyers, here’s the thing the headline number won’t tell you: the house price isn’t what decides whether you can buy, the lender does. Two people with identical deposits and incomes can get very different offers depending purely on who they ask.

“For homemovers, this data is useful context, but it shouldn’t make the decision for you.

“What actually matters is your situation – how much of your current home you own outright, what you can realistically afford, and what’s actually driving the move, whether that’s more space for a growing family or a better school catchment – not what’s happening nationally.

“For remortgagers, here’s the plain version: your house is probably worth a different amount than when you last checked. That changes how much of it you actually own compared to what’s on your mortgage – which is exactly what lenders look at when deciding your rate. So if your home’s value has moved, so has your deal.

“Whichever of these you are, the same thing is true: one number can’t tell you what to do, because it was never about you specifically.”

STAGNANT MARKET

Gareth Lewis, deputy CEO of MT Finance, said: “The market is still stagnant with little movement in house prices largely because transaction volumes are low.

“With a lack of competitive tension in many transactions, prices aren’t shifting much either way. If you get the right property in the right location then this is not the case but few meet this criteria.

“The market still needs stimulus and still needs people to transact. Interest rates were expected to fall this year but that outlook has changed with the Bank of England holding base rate for several months. It is not an easy market.”

CALM AND STABILITY

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The Bank of England’s decision to hold interest rates for the fifth consecutive meeting is creating calm and stability, which is encouraging buyers and sellers to transact.

“In recent days, a drop off in swap rates, which underpin the pricing of fixed-rate mortgages, has enabled Nationwide, Halifax and Barclays to announce cuts in their mortgage rates, which had risen on the back of higher funding rates.

“With August tending to be a quieter time of year for the market, we expect other lenders to follow suit in an effort to drum up more business. This could present an opportunity for those buyers not distracted by the holidays to make their move.

“First-time buyers will be encouraged as house prices remain steady rather than soar. Lenders are working hard on offering solutions to those trying to get on the ladder for the first time, which is leading to a small improvement in their numbers.”

GEOPOLITICAL TENSIONS

Karen Noye, mortgage expert at Quilter, said: “Lloyds’ latest house price index shows average UK property values were steady in July, leaving the average home worth £299,253.

“The housing market is increasingly at the mercy of events far beyond the UK housing sector itself.

“From geopolitical tensions in the Middle East to shifting expectations for interest rates, buyers are having to factor global uncertainty into what is often the biggest financial decision of their lives.

“While house prices have remained relatively resilient, the outlook for mortgage rates has become less certain.

“Fixed mortgage pricing is heavily influenced by swap markets, which have become increasingly sensitive to both domestic economic data and international developments.

“Recent tensions in the Middle East have the potential to influence inflation expectations and, in turn, market views on the future path of interest rates. This is a lot for buyers to grapple with.

“It is also worth remembering that this is traditionally a quieter period for the housing market.

“During the summer months many households swap house hunting for holidays, naturally softening activity levels and taking some momentum out of price growth.

“Underlying demand for homeownership remains strong, but affordability continues to be the market’s biggest challenge. Even as lenders compete hard for business, mortgage costs remain significantly higher than many buyers have become accustomed to over the past decade.

More to follow…