UK house price growth has all but ground to a halt, with values rising just 0.1 per cent in the year to July, the slowest annual rate since November 2023, according to the latest Lloyds House Price Index.
The average property now costs £299,253, barely changed from £299,396 in June, the Lloyds House Price Index shows. On a quarterly basis prices slipped 0.3 per cent, reversing a 0.2 per cent rise in June.
For landlords and portfolio investors, the headline number confirms what many will have sensed on the ground. The market is neither rising nor falling, it is simply treading water.
Two years of flatlining values
Amanda Bryden, head of mortgages at Lloyds, said the figures cap a long stretch of stability. “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 the binding constraint, she added, particularly after recent events in the Middle East nudged mortgage rates higher, a dynamic that echoes the pattern seen earlier this summer when rising mortgage costs linked to the Iran conflict pushed prices lower for two consecutive months.
“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,” Bryden said. The Bank of England’s latest Money and Credit release recorded the same June uptick in approvals for house purchase.
Thin volumes, no competitive tension
Gareth Lewis, deputy CEO of specialist lender MT Finance, argued that low transaction numbers are what is really pinning prices down. “The market is still stagnant with little movement in house prices largely because transaction volumes are low. With a lack of competitive tension in many transactions, prices aren’t shifting much either way. If you get the right property in the right location then this is not the case, but few meet this criteria,” he said.
Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau, cautioned against reading too much into any single month. The monthly figure “moves around for reasons that have nothing to do with the market”, she said, adding that “it’s the 0.1% annual increase that actually tells you what’s happening”.
The regional divide keeps widening
The flat national average conceals sharply different regional stories. Northern Ireland remains the UK’s strongest performer, with annual growth of 7.4 per cent, while Scotland rose 3.6 per cent and Wales 1.6 per cent, according to the index.
Within England, the North East led with annual growth of 8 per cent and the North West gained 2.1 per cent. At the other end of the table, prices fell 2 per cent in the South East and 1.3 per cent in London.
Tom Bill, head of UK residential research at Knight Frank, said: “Affordability continues to shape the house price map of the UK, with London and the south-east under-performing less expensive regions.” That split mirrors the pattern set out in our UK housing market outlook for 2026, which flagged northern regions as the likeliest winners this year.
What this means for investors
Lloyds expects both activity and prices to stay broadly stable for the rest of the year. “Developments will be shaped by both how mortgage rates respond to the outlook for inflation and wider household confidence,” Bryden said.
For investors, a flat national market with a widening north-south divide rewards selectivity over timing. Capital growth is being generated almost entirely in cheaper northern markets, where entry costs are lower and yields stronger, as our guide to the best buy-to-let hotspots for a £25,000 deposit sets out. With activity so sensitive to borrowing costs, the next move in mortgage rates, rather than the next house price release, is the number worth watching.
