UK House Price Growth Hits Lowest Since Late 2023 Amidst Rising Mortgage Rates

UK house price growth slowed to its lowest rate since late 2023 in July, with average property values experiencing a slight decline. Lloyds Bank reported that the average home's value fell by £143 in July, following a modest increase of £584 in June. The average house price now stands at £299,253, marking only a 0.1% increase year-on-year. This represents the slowest annual growth recorded since November 2023.

For the past two years, the UK property market has remained largely stagnant, with typical home values fluctuating within a narrow 0.5% range. Over the last four years, property prices have shown minimal movement, and the average home is worth only 2% more than it was in the summer of 2022. This period of flat growth contrasts with previous market trends.

Mortgage rates have recently edged higher again, influenced by inflation stemming from geopolitical events in the Middle East. This rise reverses earlier hopes of potential interest rate cuts by the Bank of England, increasing costs for those looking to purchase a home or remortgage. Amanda Bryden, head of mortgages at Lloyds, noted that an uncertain economic backdrop and volatile mortgage rates are impacting both buyers and sellers. While housing demand remains steady, market activity is highly responsive to changes in mortgage rates.

Lloyds Bank anticipates that housing market activity and prices will remain relatively stable for the remainder of the year. Affordability continues to be a significant hurdle for many prospective buyers.

Regional disparities persist in the housing market. Northern regions of England are showing stronger house price growth. The North East recorded a 2.8% year-on-year increase, bringing the average property price to £182,488, while the North West saw a 2.1% rise to £247,836. In contrast, southern England has experienced price declines. The South East saw a year-on-year fall in prices, with the average home in London down 1.3% to £533,930. Estate agents note that London and the South East are lagging behind national averages, partly attributed to a notable outflow of residents from London.

Further afield, Northern Ireland continues to see robust growth with prices up 7.4% year-on-year. Scotland also reported solid growth, with prices increasing by 3.6% to an average of £223,246. Wales experienced a more moderate 1.6% increase in house prices compared to a year ago, reaching a typical property value of £231,458.