House prices hold steady amid ongoing market pressure

Despite ongoing market uncertainty, house prices held steady in September.

According to the Lloyds House Price Index, prices recorded no monthly growth (0.0%), following a 0.3% decline in August.

The average property price now stands at £298,441, up slightly from £298,395 in August.

Housing market has been fairly subdued

Andrew Asaam, mortgages director at Lloyds, said property prices have proved to be resilient during ongoing market uncertainty.

He said: “UK house prices were unchanged in September (0.0%), following a -0.3% fall in August. The average property now costs £298,441, while annual growth also remained flat at 0.0%.

“While the market overall has been fairly subdued, property prices have so far proved resilient during a period of higher mortgage rates, which has been driven by changing expectations around the future path of Base Rate.

“That’s mirrored in wider economic data, with household spending holding up better than many expected despite energy and other cost pressures arising from the Middle East conflict.

“Whether that picture continues is likely to depend on how confident consumers feel that the latest cost of living pressures will prove temporary. Confidence has long been a key driver of housing market activity, and will play an important role in shaping demand over the remainder of this year and into 2027.

“For now, the housing market appears to be balancing buyer caution with continued underlying demand. While higher mortgage rates and wider economic uncertainty are encouraging some people to take a more measured approach, new enquiries from prospective buyers are now at their highest since February. That should help sustain activity in the near term, with any movement in house prices likely to remain modest.”

House prices remain under pressure

The data also reveals Northern Ireland continues to lead the UK, with annual house price growth increasing to +7.4% from 6.8% last month. The average property value has also reached a new record high of £231,917.

Scotland continues to post solid growth, with prices up +3.4% over the past year to an average of £223,330. Growth has also strengthened in Wales, rising to +1.2%, with the typical property now valued at £231,287.

In England, the strongest annual growth remains in the north. The North East recorded growth of +2.4%, taking the average property price to £184,546, while the North West saw prices rise +1.9% to £248,932.

The West Midlands was the only other English region to see positive annual growth, at +0.8%, with the average property value of £260,892.

By contrast, house prices remain under pressure across much of southern England, where higher average property values continue to present a greater affordability challenge.

Greater London recorded the largest annual decline, down -2.2% year-on-year to £531,548, closely followed by the South East, down -2.1% to £380,829. Prices in Eastern England fell -1.6% to £330,151.

Industry reaction

Nathan Emerson, CEO of Propertymark, said: “Against a backdrop of continued pressure across the global economy, it is perhaps unsurprising to see some fluctuation in domestic house prices. It is important to remember that, over a prolonged period, house price growth is rarely a straightforward upward trend. The market will inevitably experience periods of change as wider economic conditions, base rates, inflation and consumer confidence influence the decisions of buyers and sellers.

“With the Autumn Budget now just weeks away, there will be close attention on whether the government introduces measures that offer greater certainty to those looking to buy or sell. A supportive environment could help provide the confidence needed for more people to make decisions about their housing plans.

“Support for first-time buyers would be particularly welcome, given the ongoing challenges many face in saving for a deposit and meeting affordability requirements. At the same time, measures that encourage continued investment in housing will be important to ensure supply keeps pace with future demand and that the market remains resilient over the longer term.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Prices are holding firm as buyers try to ensure further increases in mortgage costs and inflation are balanced with the unpredictability of fallout from the Iran conflict and seller expectations.

“Bearing in mind approximately four out of five sellers are buyers, only those who recognise the genuine reasons behind often cheeky offers and adopt a similar approach to their onward purchases are mostly successful.

“Looking forward, inevitable speculation about the contents of the Budget at the end of the month are prompting pauses for some although first-time buyers in particular are likely to turn out to be winners rather than losers.”

Tomer Aboody, director of specialist lender MT Finance, said: “September’s lack of movement in pricing comes as no surprise. With Andy Burnham pointing to further and harsher taxes both on homeowners and landlords, any buyers out there are proceeding with caution. Disappointingly, trying to squeeze every home owner as much as possible isn’t the way to encourage growth in the economy and help it flourish.

“In the hope that Andy Burnham is advised against the worst of any planned taxes, and the Budget isn’t as bad as feared, we will see how the year finishes.

“It is also important to put into perspective that any fall in pricing comes from a position of many years of increases in values, putting home ownership out of reach of many aspiring buyers.”

Tom Bill, head of UK residential research at Knight Frank, said: “This year has been a story of rising energy prices and stalling house prices, as the unpredictable Middle East conflict unfolds and drives borrowing costs higher.

“This month’s Budget adds to the uncertainty as buyers and sellers wonder which of the recurring tax rumours proves to be true. We think downward price pressure will continue during the final months of the year as the impact of higher mortgage rates feeds slowly through to buyers.”