House prices stall as annual growth falls to 0.1%

Landlords weighing up purchases or sales saw little movement in house prices during July as affordability pressures continued to affect buyers.

The Lloyds House Price Index, formerly the Halifax HPI, recorded no monthly change, following a 0.2% rise in June.

The average UK property price slipped from £299,396 to £299,253, with annual growth slowing to 0.1%.

That’s its lowest rate since November 2023.

Mortgage rates edge higher

Amanda Bryden, the head of mortgages at Lloyds, said: “Average house prices have remained relatively stable for almost two years, moving within a narrow range over that period and sitting just +0.5% higher than they were in November 2024.

“That trend has persisted even as buyers and sellers have faced a more uncertain economic backdrop this year.”

She added: “Looking ahead, we expect market activity and house prices to remain relatively stable over the remainder of the year.

“Developments will be shaped by both how mortgage rates respond to the outlook for inflation and wider household confidence.”

Regional growth divides

Northern Ireland recorded the strongest annual growth at 7.4%, taking its average property price to £231,131.

Prices in Scotland rose by 3.6% over the year to an average of £223,246.

Wales recorded annual growth of 1.6%, with the typical property valued at £231,458.

In England, prices increased by 2.8% in the North East to £182,488, while the North West recorded growth of 2.1% to £247,836.

The South East recorded the sharpest regional decline, with prices falling by 2% over the year to £381,146.

Greater London prices dropped by 1.3%, although the capital retained the UK’s highest regional average at £533,930.

Property sector reaction to house prices

Tom Bill, the head of UK residential research at Knight Frank, said rising mortgage costs and political uncertainty over property taxes had reduced the usual seasonal increase to a ‘sideways drift’.

He said affordability continued to shape regional performance, with London and the South East underperforming less expensive areas.

Propertymark chief executive Nathan Emerson said affordability remained the main obstacle, although steady interest rates and lower inflation could support buyer confidence later in the year.

OnTheMarket president Jason Tebb said stable prices showed buyers and sellers were adjusting their expectations, but higher mortgage rates and political uncertainty continued to restrain activity.

Jeremy Leaf, a north London estate agent and former RICS residential chairman, said wage growth was helping to offset the effect of unsold stock, particularly flats, while speculation about Budget property tax changes was increasingly influencing decisions.

Iain McKenzie of The Guild of Property Professionals and Nicky Stevenson of Fine & Country said demand had become more measured, with buyers enjoying greater choice and sellers needing to price realistically to secure a sale.