UK House Prices Remain Flat in September as Higher Mortgage Rates Weigh on Market, Lloyds Data Shows

London: British house prices were unchanged in September, according to data published on Wednesday by Lloyds Banking Group, as the housing market held steady despite the pressure of rising mortgage rates and wider economic uncertainty.

The Lloyds House Price Index, formerly known as the Halifax House Price Index, showed that prices recorded no change on a monthly basis in September, following a 0.3 percent fall in August. Prices were also unchanged compared with September last year, after declining by 0.4 percent on an annual basis in August, the first annual fall since November 2023. Over the three months to September, prices were 0.2 percent lower.

The figures fell short of market expectations. Economists polled by Reuters had forecast a 0.1 percent monthly rise and a 0.2 percent annual increase. The average UK property price edged up to £298,441 in September from £298,395 in August.

Andrew Asaam, Mortgages Director at Lloyds, said that while the market had been fairly subdued overall, property prices had so far proved resilient during a period of higher mortgage rates, driven by changing expectations about the future path of the Bank of England’s base rate. He noted that household spending had held up better than many had expected, despite energy and other cost pressures stemming from the conflict in the Middle East.

Mr. Asaam added that higher borrowing costs and economic uncertainty were making some buyers more cautious, but that new buyer enquiries had reached their highest level since February. He said this should help sustain activity in the near term, with any movement in house prices likely to remain modest.

The data revealed a widening regional divide. Northern Ireland continued to lead the United Kingdom, with annual price growth rising to 7.4 percent from 6.8 percent in August, while Greater London recorded the largest annual decline, with prices down 2.2 percent. Lloyds said prices remained under pressure across much of southern England, where higher property values pose a greater affordability challenge.

The average price paid by first-time buyers was broadly unchanged at £236,779, up slightly from £236,568 in August but below the record of £241,244 set in February.

Separate figures from the Bank of England showed that mortgage approvals for house purchases fell to 54,918, down 1.8 percent from July and 16 percent lower than a year earlier, which Lloyds said pointed to further softening in the market.