The latest Lloyds House Price Index points to improving confidence in the property market, with house prices recording their first monthly rise in four months. As mortgage rates continue to ease, borrowing conditions are becoming more favourable, supporting buyer activity despite ongoing affordability pressures and economic uncertainty.
Mortgage and property experts have shared their thoughts and views with us, and what this means for the property market moving forward.
“House prices rose for the first time in four months during June, increasing by +0.2%, compared to May. The typical property now costs £299,330, while the annual rate of growth also edged higher to +0.6%.
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.”
Amanda Bryden, Head of Mortgages at Lloyds
“This latest spate of rate reductions is a positive start to the week for borrowers, with lower fixed and tracker rates across a range of products offering greater choice for first time buyers, homemovers, and remortgagers.
For aspiring homebuyers, any reduction in borrowing costs is welcome. Our research shows it now takes the average first-time buyer six years to save for a deposit, so continued competition between lenders is another step towards easing some of the financial pressure they face when getting onto the property ladder.
After spending so long saving, nearly half of first-time buyers tell us their biggest priority is finding a home with enough space for a growing family. While affordability remains a key challenge, increased competition between lenders is creating more opportunities for borrowers to secure a competitive deal.
With rates and products continuing to change, speaking to a mortgage adviser is the best way to understand the options available, find the right deal, and make the most of an increasingly competitive market.”
Rachel Geddes, Strategic Lender Relationships Director, Mortgage Advice Bureau
“The recovery is still tentative but Britain’s North-South divide is back in force.
Property prices are again heading in opposite directions at opposite ends of the country.
Average prices in the South East dropped by 2% in the year to June, nearly twice as fast as they fell in London.
Meanwhile, North East England saw prices surge by 2.8%, and annual price inflation in Scotland has accelerated to 3.9%.
In southern areas a glut of supply is attracting too few serious buyers, and this is steadily driving prices down. Buyers are often able to ask for, and get, reductions on the asking price. Sellers putting their home on the market now must rein in their price expectations or risk seeing it languish unsold.
In the north, the forces of supply and demand are more balanced, and this is helping prices to rise steadily. The north’s rate of growth could accelerate further under a Burnham premiership, and buyer sentiment here is already lifting at the prospect of huge government investment and job creation.
While mortgage interest rates have eased in recent weeks, and there are encouraging signs that they may tick down further in coming months, the extra cost of borrowing remains a major speed bump for mortgage-dependent buyers.
Confidence remains tentative in most areas, and buyers’ caution and sense that they have both time and choice on their side is likely to keep national price rises modest.
It’s too early to talk of the market bouncing back. As for the North-South divide, it never really went away and now looks likely to grow further.”
Jonathan Hopper, CEO of Garrington Property Finders
“Property prices have held up surprisingly well, bearing in mind continuing concerns about the impact of war on the cost of living and energy prices, as well as mortgage rates in particular.
However, we are finding reluctance of some owners to recognise the new market realities of reduced confidence and difficulty of generating offers is holding back transactions.
Now, political uncertainty is providing another excuse for buyers and sellers to sit on their hands. Speculation about tax undermines willingness to take on debt, so the sooner Andy Burnham is confirmed as prime minister and we know where costs are likely to be changed, the better.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman
“June was a reality check for a lot of sellers. Whilst demand is still there, most buyers are far more selective and price-sensitive than earlier in the year. House hunters are not disappearing; they are simply refusing to chase optimistic asking prices.”
James Nightingall of HomeFinder AI
“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.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts
“Lenders continue to slowly chip away at their mortgage rates, which is giving hope to borrowers and encouraging activity.
However, buyers are not getting carried away – the small uptick in average house prices indicates that buyers are negotiating hard and not willing to pay more than they need to.
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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients
“UK house prices picked up marginally in June, rising 0.2% on the month and 0.6% on an annual basis, according to the newly rebranded Lloyds house price index. This marks the first monthly increase since February, and brings the average property price to £299,330.
Regional differences remain stark, with house price growth most concentrated in the North while the South has continued to struggle. Northern Ireland has taken the top spot with 7.4% annual growth, and in England, the North East saw prices rise 2.8%. The South East led declines with a 2.0% fall in prices, and London was not far behind with a 1.1% decline.
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. For those looking to buy their first home, move or remortgage, reviewing options as early as possible and seeking professional advice can help ensure you are well positioned as market conditions continue to evolve.”
Ian Futcher, financial planner at Quilter
“Those who need to move continue to buy and sell homes. Affordability concerns remain but easing mortgage rates are helping, as borrowers adapt to shifting market conditions. Political uncertainty and challenging economic conditions continue to form a backdrop, but the resilience of the market and the needs-based buyers and sellers who have no choice but to proceed, is evident. With average house prices edging upwards, buyers and sellers are adopting a pragmatic outlook and adjusting expectations. For those hoping to get on the ladder for the first time, this is a more encouraging market to work with, free from boom and bust, with prices which are not running away with themselves and pricing would-be buyers out further.”
Jason Tebb, President of OnTheMarket
“Property prices have held up surprisingly well, bearing in mind continuing concerns about the impact of war on the cost of living and energy prices, as well as mortgage rates in particular.
However, we are finding reluctance of some owners to recognise the new market realities of reduced confidence and difficulty of generating offers is holding back transactions.
Now, political uncertainty is providing another excuse for buyers and sellers to sit on their hands. Speculation about tax undermines willingness to take on debt so the sooner Andy Burnham is confirmed as prime minister and we know where costs are likely to be changed the better.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman
“From a lending perspective, we are seeing valuers cautious on price while buyers are looking for a steal and prepared to negotiate hard.
After a strong start to the market this year, we are now seeing the ramifications of an interest rate environment which has become unstable again, and the impact this is having on transactions. Volatile funding rates are the real issue at the moment; while everything pointed towards a lower interest rate environment at the start of this year, the impact of war in the Middle East has since changed this outlook.
The housing market urgently needs some government stimulus to encourage activity. Removing stamp duty would give a significant boost to the number of housing market transactions – after the deposit, stamp duty is the biggest outlay when buying a home. It isn’t just a big hit for those at the lower end of the market but impacts buyers at every level. If you are moving up the ladder and looking at what you can afford to buy, the whacking great stamp duty cost is inevitably going to limit how far you can stretch yourself.
In terms of the land value tax that has been suggested as a replacement, an annual cost is something people would get used to over time, whereas a one-off hit, like stamp duty, is much harder to budget for.”
Gareth Lewis, deputy CEO of specialist lender MT Finance
“Nicky Stevenson, Managing Director at Fine & Country, comments: “The housing market found a little more stability in June, with Lloyds reporting its first rise in house prices for four months.
“A monthly increase of 0.2% is modest, but that is no bad thing in the current climate. Buyers are still navigating affordability pressures and a shifting mortgage market, so steady movement is healthier than sharp jumps that risk pricing more people out.
“Confidence has been tested by global uncertainty, energy costs and changing expectations around interest rates, but lower borrowing costs are starting to offer some encouragement to those considering a move.
That said, this is still a cautious market. Mortgage approvals softened in May, which tells us some buyers paused as rates rose earlier in the year. However, if borrowing costs continue to ease, we expect some of that activity to return as households regain confidence in what they can afford.
It is also encouraging to see first-time buyer prices showing stronger annual growth, as demand at the entry point of the market is vital for keeping chains moving. When first-time buyers are active, it supports confidence further up the ladder. That should be kept in mind as the government consults on its proposed First Time Buyer ISA.
On the ground, we are seeing that buyers are active but selective, and sellers need to understand where demand really sits locally. If mortgage pricing continues to improve, the second half of the year should see a steadier flow of committed movers.”
Nicky Stevenson, Managing Director at Fine & Country
