LLOYDS says house prices rose by 0.2% in June as the outlook looks “brighter” for the UK – but it “doesn’t suddenly mean the market has changed direction”.
House prices rose 0.2% in June, following a 0.2% fall in May, according to the new Lloyds House Price Index published this morning.
Northern Ireland continues to record the strongest annual house price growth in the UK. Average prices are up 7.4% over the past year to £229,000.
Scotland has the next highest annual growth, now at 3.9%, with an average price of £223,277.
In Wales, property price growth has strengthened again to 0.9% on an annual basis, taking the typical home value to £231,142.
In England, stronger price growth remains concentrated in northern regions. The North East saw prices rise 2.8% over the year to £181,133, while the North West recorded annual growth of 2.4%, with the average property now costing £248,218.
By contrast, southern markets continue to see prices fall. The South East led declines, with prices down 2.0% year-on-year to £381,654, while London saw average values fall by 1.1% to £534,831.
Things are looking brighter
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.”
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, said the figures aren’t all positive.
He added: “A monthly movement of 0.2% doesn’t suddenly mean the market has changed direction. National house price averages are useful for spotting broad trends, but they’re a poor guide to the value of the individual property you’re hoping to buy. For first-time buyers, the bigger question isn’t whether prices rise or fall by a fraction in any one month.
“It’s whether the home they want remains affordable and whether they’re in a position to act when the right property comes along. No one buys the average UK house, so don’t let a national average make your decision for you.”
Babek Ismayil, CEO at homebuying platform OneDome, said the property market is showing signs of life.
He added: “Things are looking brighter in June but a measured pace for house price growth seems an accurate prediction after a difficult first half to the year and the ongoing threat of inflation. The acceleration in annual price growth for first-time buyers suggests the price window that has been open in 2026 to date is starting to close.
“Rising prices benefit homeowners but simply add to the challenges for those aspiring to get onto the ladder. The good news is that mortgage rates are continuing to edge down, with Nationwide shaving its rates by up to 0.19% from today. Overall, this house price index suggests some positive sentiment is starting to return to the market.”
The property market is starting to turn
Andrew Montlake, CEO at London-based Coreco, said the property market is resilient.
He added: “Sentiment is starting to improve along with mortgage rates and that bodes well, well at least better, for the second half of the year. Demand for property is growing as mortgage rates continue to fall but inflation will need to play ball.
“There’s still a lot of uncertainty but the property market, as ever, will likely remain resilient. The autumn property market could be a busy one after the spring season was impacted by the Middle East conflict.”
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, said the outlook is bright.
She added: “It feels like the property market is starting to turn after the volatility caused by the war in the Middle East. House prices are moving up again and mortgage rates are coming down, which always starts to drive demand.
“The next set of inflation data and the interest rate meeting at the end of July will, of course, be key. But for now the outlook is looking a bit brighter.”
Not enough to trigger another property boom
Tracey Dixon, Owner at Cardiff-based Pure Mortgage and Protection, said she expects the market to continue to improve this year.
She added: “Lower mortgage rates are supporting house prices, but they’re not enough to trigger another property boom.
“A 0.2% monthly increase points to a market that’s becoming more stable, not one that’s overheating. Buyers are responding to improving mortgage rates, but affordability is still the biggest factor shaping demand.
“For first-time buyers, the real opportunity isn’t trying to predict house prices – it’s taking advantage of improving borrowing costs before competition increases. Waiting for the ‘perfect moment’ can often mean paying more later if rates continue to fall and more buyers enter the market.
“I’d expect house prices to continue rising gradually over the rest of the year, supported by lower mortgage rates, but affordability should prevent the rapid growth we’ve seen in previous market cycles.”
Ranald Mitchell, Director at Norwich-based bad credit mortgage specialists Charwin Mortgages, said it is bad news for first-time buyers.
He added: “Steady house price growth is good news for the market. We’re seeing confidence gradually return without the risk of another unsustainable boom. The challenge for first-time buyers is that today’s modest rises could become tomorrow’s stronger increases if mortgage rates continue to ease and more buyers return to the market.”
Photo by Ivana Cajina on Unsplash.
