UK House Price Growth Slows to Lowest Rate Since Late 2023

House price growth in the UK has fallen to its slowest pace since late 2023, as elevated mortgage rates and ongoing affordability concerns deter potential buyers. In July, the average property price saw a marginal decrease of £143, following a modest increase of £584 in June. The average house price now stands at £299,253, representing an annual growth of just 0.1 percent, the lowest rate recorded since November 2023.

For the past two years, average house prices have remained largely stagnant, fluctuating within a narrow 0.5 percent range. Over the last four years, typical home values have seen minimal movement, with a modest 2 percent increase since the summer of 2022.

Amanda Bryden, head of mortgages at Lloyds, attributed the slowdown to an uncertain economic backdrop and fluctuating mortgage rates. "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," Bryden stated. She added that while housing demand is steady, market activity is highly sensitive to changes in mortgage rates, and a relatively stable market is anticipated for the remainder of the year.

Regional Variations Emerge

A notable divide is apparent in house price performance across different regions of England. Northern areas continue to experience stronger growth, with prices in the North East rising by 2.8 percent to an average of £182,488, and the North West seeing a 2.1 percent increase to £247,836. Conversely, southern regions have seen price declines. The South East experienced a 2 percent year-on-year fall, bringing the average price to £381,146, while London's average home value dropped by 1.3 percent to £533,930.

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, highlighted this regional disparity. "It's becoming harder to make the case that London is aspirational anymore, and that shift in sentiment matters for the market – buyers are voting with their feet," Reynolds commented, referencing ONS figures indicating that over 420,000 people left London for other parts of the UK last year.

Outside of England, Northern Ireland continues to see substantial price increases, up 7.4 percent year-on-year. Scotland recorded solid growth with prices rising 3.6 percent to an average of £223,246. In Wales, house prices are 1.6 percent higher than a year ago, with the typical property value reaching £231,458.

The recent uptick in mortgage rates is linked to inflationary pressures stemming from the conflict in Iran, which has tempered expectations of a Bank of England rate cut. This has led to higher borrowing costs for those remortgaging or purchasing a new home.