House prices rose for the first time in four months in June, rising by 0.2%, following a fall of 0.2% in May, the Lloyds House Price Index shows.
The former Halifax HPI, renamed following Halifax's rebranding to Lloyds, shows that the typical property now costs £299,330, while the annual rate of growth also edged higher to 0.6%, from 0.5% in May.
Northern Ireland continues to record the strongest annual house price growth in the UK at 7.4%.
Scotland has the next highest annual growth, now at 3.9%, while in Wales, property price growth has strengthened again to 0.9% on annual basis.
In England, stronger price growth remains concentrated in northern regions. The North East saw prices rise 2.8% over the year, while the North West recorded annual growth of 2.4%.
By contrast, southern markets continue to see prices fall. The South East led declines, with prices down 2.0% year-on-year, while London saw average values fall by -1.1%.
Amanda Bryden, head of mortgages at Lloyds, said: “Recent price trends continue to reflect wider economic uncertainty, including the impact of global events on inflation and interest rate expectations. While affordability remains stretched for many buyers, mortgage rates have eased from their recent highs, offering some encouragement to those considering a move.
“While latest industry data shows the number of new mortgage approvals dropped in May, this wasn’t unexpected given the spike in rates seen earlier this year, and we’d expect to see activity recover assuming borrowing costs continue to fall.
“For first-time buyers, annual price growth increased to 0.8% in June from 0.3% in May, with the average first-time buyer property now costing £240,433, suggesting demand remains resilient.
“Looking ahead, we expect the housing market to continue moving at a measured pace. Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor. The outlook for house prices will depend largely on inflation continuing to ease and household confidence gradually improving.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, commented: “The market is broadly flat, with growth ticking along at a modest pace rather than reversing. That's exactly what you'd expect while fixed rate mortgage pricing has been sitting at an artificially elevated level, driven as much by lenders managing a surge in applications as by the underlying economics.
“The encouraging news is that brokers are already seeing the first signs of a correction coming through on fixed rates – not a return to the sub-4% deals of six weeks ago, but a genuine easing from where we've been.
“If this continues, we'd expect to see it feed through into more confident buyer activity over the coming months, rather than the cautious, wait-and-see approach that's kept price growth so muted.
“We're also seeing more interest in tracker mortgages, priced off base rate rather than a fixed margin, as buyers hedge against uncertainty while keeping the option to switch to a fixed deal without penalty once pricing settles further. In short: these figures reflect the peak of the rate squeeze, not the start of a new slowdown, and there's a reasonable case for a gentler market from here, as well as a reason for cautious optimism.”
Ian Futcher, financial planner at Quilter, added: “Mortgage rates have eased from the highs seen earlier this year as swap rates have stabilised and lenders compete for relatively limited business, but borrowing costs are still elevated and affordability is stretched for many households. Recent lending and approvals data have shown buyers are being much more cautious, and it seems many are opting to hold off on making any big moves until they have more certainty around the path of interest rates.
“There is also a risk that household finances get worse before they get better. While tensions in the Middle East have eased and the ceasefire has helped calm markets somewhat, many households are unlikely to feel the benefits immediately. The energy price cap has risen by 13% this month, and higher energy and food bills will add to the squeeze. For prospective buyers, this will make affordability even more challenging, which could in turn weigh on house prices.
“The Bank of England will likely be inclined to sit on the fence for now, but lender competition could still result in some opportunities for buyers. Should mortgage rates gradually edge lower and confidence improve, housing market activity could begin to pick up later in the year.”
