House prices increased for the first time in four months during June, rising by 0.2% compared with May, according to the latest Lloyds House Price Index.
The average UK property is now worth £299,330. Despite the monthly increase, prices were down 0.4% over the quarter but remained 0.6% higher than a year earlier.
Northern Ireland continued to record the strongest annual house price growth in the UK, with average values rising 7.4% over the past year to £229,000.
Scotland recorded annual growth of 3.9%, taking the average property price to £223,277, while prices in Wales increased by 0.9% year-on-year to £231,142.
Within England, the strongest annual growth remained concentrated in northern regions.
House prices in the North East rose 2.8% over the year to £181,133, while the North West recorded annual growth of 2.4%, with the average property now costing £248,218.
By contrast, southern markets continued to weaken. The South East recorded the largest annual decline, with prices falling 2% to £381,654, while average values in London were down 1.1% to £534,831.
Amanda Bryden, head of mortgages at Lloyds, said: “Recent price trends continue to reflect wider economic uncertainty, including the impact of global events on inflation and interest rate expectations.
While affordability remains stretched for many buyers, mortgage rates have eased from their recent highs, offering some encouragement to those considering a move.
“While latest industry data shows the number of new mortgage approvals dropped in May, this wasn’t unexpected given the spike in rates seen earlier this year, and we’d expect to see activity recover assuming borrowing costs continue to fall.
“For first-time buyers, annual price growth increased to +0.8% in June from +0.3% in May, with the average first-time buyer property now costing £240,433, suggesting demand remains resilient.
“Looking ahead, we expect the housing market to continue moving at a measured pace. Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor.
“The outlook for house prices will depend largely on inflation continuing to ease and household confidence gradually improving.”
VALUERS CAUTIOUS
Gareth Lewis, deputy chief executive officer of specialist lender MT Finance, says: “From a lending perspective, we are seeing valuers cautious on price while buyers are looking for a steal and prepared to negotiate hard.
He added: “After a strong start to the market this year, we are now seeing the ramifications of an interest rate environment which has become unstable again, and the impact this is having on transactions.”
Lewis said volatile funding rates are the real issue at the moment: “while everything pointed towards a lower interest rate environment at the start of this year, the impact of war in the Middle East has since changed this outlook,”
He would like the government to consider removing Stamp Duty to help kick-start the market.
“The housing market urgently needs some government stimulus to encourage activity. Removing Stamp Duty would give a significant boost to the number of housing market transactions – after the deposit, Stamp Duty is the biggest outlay when buying a home,” he said.
“It isn’t just a big hit for those at the lower end of the market but impacts buyers at every level. If you are moving up the ladder and looking at what you can afford to buy, the whacking great Stamp Duty cost is inevitably going to limit how far you can stretch yourself.
“In terms of the land value tax that has been suggested as a replacement, an annual cost is something people would get used to over time whereas a one-off hit, like Stamp Duty, is much harder to budget for,” he added.
