UK house prices remained unchanged in September despite rising mortgage rates, according to the latest House Price Index from Lloyds.
Prices held steady from the previous month following a 0.3% fall in August, while annual growth also remained flat. The average property now costs £298,441.
Andrew Asaam, Mortgages Director at Lloyds, said: “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 the 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.”
Lloyds’ report says that the average UK first-time buyer property price was broadly unchanged in September at £236,779, but remains below the record high of £241,244 recorded in February.
The lender expects the introduction of the government’s Your First Home scheme to support more aspiring homeowners to take their first step onto the property ladder sooner, but only once the full eligibility criteria and implementation details have been confirmed in the upcoming Budget.
Northern Ireland continues to lead the UK in terms of 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, while prices in Eastern England fell 1.6% to £330,151.
Ryan Etchells, Chief Commercial Officer at Together, said: “House prices holding steady this month points to a degree of resilience in the property market, following a difficult year so far. However, with average mortgage rates now hitting 6%, affordability remains a significant hurdle for prospective buyers.”
“The data suggests that despite low consumer confidence and rising mortgage rates, house prices are remaining relatively stable. While pressures on personal finances persist, wage growth remains steady, and government intervention may help boost the market.”
“Indeed, in the upcoming Budget, any attempt to address the effect of exorbitant Stamp Duty on the fluidity of the market would be a welcome move, and while the government has little room to manoeuvre, the benefits of an injection of buyer activity could pay dividends.”
“Those looking to take advantage of subdued prices and press ahead with their property plans should consider working with a specialist lender who can assess their needs on an individual basis and offer more flexible finance based on a case-by-case approach.”
Emeritus Professor Joe Nellis, Head of Economic Research at MHA, commented: “The latest Lloyds House Price Index shows the UK housing market has come to a standstill. House prices failed to grow in September, following a 0.3% fall in August, leaving prices no higher than they were 12 months ago.”
“Further evidence of a stall in the market is confirmed by recent Bank of England data, showing that mortgage approvals for house purchases fell to 54,918 in August, the lowest level since December 2023. Weakening mortgage demand is a key leading indicator, suggesting activity is likely to remain subdued in the months ahead.”
“Affordability is still the main blockage to any meaningful recovery. Mortgage borrowing costs have been rising, households are still struggling with the cost of living, and economic uncertainty is prompting many potential buyers to delay purchase decisions.”
“For now, the UK housing market has stalled. Improving first-time buyer affordability may unlock demand, but this will take time to materialise. A more sustainable recovery in the housing market requires lower mortgage interest rates, stronger buyer confidence and, crucially, more homes.”
