House price growth stalled in September, the latest Lloyds House Price Index has revealed.
Figures from the bank show average annual and monthly price growth was flat on a national basis, with typical prices now at £298,441.
Northern Ireland continues to lead the UK, with 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.
Average prices in Scotland are up 3.4% annually to £223,330, while Wales posted 1.2% growth, with the typical property now valued at £231,287.
The housing market appears to be balancing buyer caution with continued underlying demand.”
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.
In 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. Prices in east England fell 1.6% to £330,151.
Andrew Asaam, Mortgages Director at Lloyds, says: “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 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.”
Nathan Emerson, chief executive of Propertymark, says: “Against a backdrop of continued pressure across the global economy, it is perhaps unsurprising to see some fluctuation in domestic house prices. It is important to remember that, over a prolonged period, house price growth is rarely a straightforward upward trend. The market will inevitably experience periods of change as wider economic conditions, base rates, inflation and consumer confidence influence the decisions of buyers and sellers.
“With the Autumn Budget now just weeks away, there will be close attention on whether the UK Government introduces measures that offer greater certainty to those looking to buy or sell. A supportive environment could help provide the confidence needed for more people to make decisions about their housing plans.
“Support for first-time buyers would be particularly welcome, given the ongoing challenges many face in saving for a deposit and meeting affordability requirements. At the same time, measures that encourage continued investment in housing will be important to ensure supply keeps pace with future demand and that the market remains resilient over the longer term.”
Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, says: “The market has lost a bit of momentum as we head into the final quarter of the year. Annual price growth has slowed to a crawl, and mortgage approvals are well down on a year ago. Buyers are still out there, but they’re being careful.
“Borrowing costs are the main brake. The base rate has held steady at 3.75%, and fixed mortgage rates have stayed stubbornly high because lenders are pricing in rates staying higher for longer. That’s keeping a lid on affordability and on what buyers can stretch to.
“The other big issue is the upcoming Budget. Uncertainty around potential tax changes is making some buyers and sellers sit on their hands. The reassurance that Stamp Duty and Council Tax won’t be overhauled this time around is helpful, as it reduces a little of the uncertainty we have seen in the past. However, it would be far better if stamp duty were to be reduced, in order to give the housing market and wider economy a boost. Regardless, until the Chancellor sits down, a degree of caution is inevitable.
“For the remainder of the year, we expect prices to be broadly flat, with activity picking up modestly if the Budget passes without too many nasty surprises.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Prices are holding firm as buyers try to ensure further increases in mortgage costs and inflation are balanced with the unpredictability of fallout from the Iran conflict and seller expectations.
“Bearing in mind approximately four out of five sellers are buyers, only those who recognise the genuine reasons behind often cheeky offers and adopt a similar approach to their onward purchases are mostly successful.
“Looking forward, inevitable speculation about the contents of the Budget at the end of the month are prompting pauses for some although first-time buyers in particular are likely to turn out to be winners rather than losers.”
Jason Tebb, President of OnTheMarket, says: “With house prices unchanged in September, there is an element of caution combined with continued underlying demand as focused buyers and sellers returned from holiday keen to proceed with their moves before the end of the year.
“The market continues to demonstrate remarkable resilience, despite higher mortgage costs. The Bank of England’s decision to hold interest rates so far this year has helped affordability, but there are concerns that rising energy bills may finally force its hand this autumn, depending on the overall risk to inflation.
“All eyes will be on the budget later this month to see what the new Prime Minister and Chancellor have planned. We already know that there will be assistance for first-time buyers buying new-build homes and hope that on balance the budget provides some much-needed impetus for the housing market, as well as the wider economy.”
Iain McKenzie, Chief Executive of The Guild of Property Professionals, says: “September’s flat house price reading is a sign of a market that is holding its ground rather than losing momentum. After a 0.3% fall in August, the fact that prices stabilised despite renewed pressure on mortgage rates shows there is still a degree of resilience among both buyers and sellers.
“That said, it would be premature to interpret this as a turning point. Higher borrowing costs and uncertainty over the future path of interest rates are clearly making some households think twice about moving, while the prospect of the Budget is adding another layer of caution.
“The encouraging factor is that transaction levels have remained relatively robust and there are still signs of buyer interest beneath the surface. Affordability has also been gradually improving as house price growth has lagged earnings, although that progress is being challenged by higher mortgage costs.
“The autumn market therefore looks set to be characterised by selective demand rather than a broad-based surge in activity. Sellers who price realistically from the outset should be best placed to attract the buyers who are still in the market.
“The key question now is whether inflationary pressures, particularly from energy, ease enough to allow interest rates and mortgage pricing to come back down. If they do, there is potential for some of the demand currently sitting on the sidelines to return and provide a stronger finish to the year.”
Nicky Stevenson, Managing Director of Fine & Country, says: “House prices holding steady in September is perhaps less significant than what is happening underneath the headline figure. Buyers are still active, but they are operating in a very different environment, with higher mortgage costs and greater choice giving them considerably more negotiating power.
“With the number of homes for sale 5% higher, buyers have plenty of options and that is putting the emphasis firmly on vendors to get their pricing right. The days when ambitious asking prices could simply be tested against a shortage of stock are not the reality of today’s market.
“The flat September reading also highlights the distinction between a market that is stable and one that is buoyant. There is no sign of a dramatic correction, but neither is there sufficient confidence for sustained price growth while borrowing costs remain elevated and the outlook for interest rates is uncertain.
“The Budget will be an important psychological milestone, but ultimately the trajectory of mortgage rates and household confidence will have a greater bearing on the market over the coming months. If financing costs ease, the fundamentals are there for activity to pick up. Earnings are outpacing house price growth and there remains underlying demand from people who need or want to move.
“For now, however, buyers are in the driving seat. Sellers who recognise that early, price competitively and focus on converting interest into offers will be the ones most likely to succeed in what remains a cautious autumn market.”
