House prices remained stable in July with no growth, following a 0.2% rise in June, the latest Lloyds house price index shows.
However, annual growth of 0.1% is the slowest rate of house price inflation since November 2023.
Formerly the Halifax house price index, the dataset shows that Northern Ireland continues to record the UK’s strongest annual growth at 7.4%.
Scotland also continues to record solid growth, with prices up 3.6% year-on-year, while annual growth in Wales stands at 1.6%.
In England, stronger price growth remains concentrated in northern regions. The North East recorded annual growth of 2.8%, while the North West saw prices rise 2.1%.
By contrast, the weakest regional markets remain in southern England. The South East saw prices fall 2.0% year-on-year, while Greater London recorded a -1.3% decline.
Amanda Bryden, 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.
“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.
“Sensitivity to borrowing costs is reflected in the latest industry data, which show a modest increase in both mortgage approvals and completed transactions in June, following a bigger dip in May. While housing demand remains broadly steady, activity continues to respond quickly to changes in mortgage rates.
“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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: "The Bank of England’s decision to hold interest rates for the fifth consecutive meeting is creating calm and stability, which is encouraging buyers and sellers to transact.
“In recent days, a drop off in Swap rates, which underpin the pricing of fixed rate mortgages, has enabled Nationwide, Halifax and Barclays to announce cuts in their mortgage rates, which had risen on the back of higher funding rates.
“With August tending to be a quieter time of year for the market, we expect other lenders to follow suit in an effort to drum up more business. This could present an opportunity for those buyers not distracted by the holidays to make their move.
“First-time buyers will be encouraged as house prices remain steady rather than soar. Lenders are working hard on offering solutions to those trying to get on the ladder for the first time, which is leading to a small improvement in their numbers.”
Karen Noye, mortgage expert at Quilter, added: “The housing market is increasingly at the mercy of events far beyond the UK housing sector itself. From geopolitical tensions in the Middle East to shifting expectations for interest rates, buyers are having to factor global uncertainty into what is often the biggest financial decision of their lives.
“While house prices have remained relatively resilient, the outlook for mortgage rates has become less certain. Fixed mortgage pricing is heavily influenced by swap markets, which have become increasingly sensitive to both domestic economic data and international developments. Recent tensions in the Middle East have the potential to influence inflation expectations and, in turn, market views on the future path of interest rates. This is a lot for buyers to grapple with.
“It is also worth remembering that this is traditionally a quieter period for the housing market. During the summer months many households swap house hunting for holidays, naturally softening activity levels and taking some momentum out of price growth.
“Underlying demand for homeownership remains strong, but affordability continues to be the market's biggest challenge. Even as lenders compete hard for business, mortgage costs remain significantly higher than many buyers have become accustomed to over the past decade.
“Looking ahead, house prices are likely to remain highly sensitive to movements in mortgage rates and broader economic confidence. The market is continuing to move forward, but buyers and sellers alike are keeping a close eye on developments at home and abroad before making major financial commitments.”
