Britain’s housing market has stalled as rising mortgage costs and renewed economic uncertainty weigh on buyers, with house prices showing virtually no movement in July.
The average UK property price was unchanged last month at £299,253, according to the latest Lloyds house price index, marking a sharp slowdown from the 0.2% monthly rise recorded in June.
Annual growth also weakened significantly, with prices just 0.1% higher than a year earlier — the weakest increase since November 2023.
The figures underline the fragile state of the property market, where hopes of a sustained recovery have been repeatedly challenged by affordability pressures, elevated borrowing costs and uncertainty over the economic outlook.
Northern Ireland remained the strongest-performing region, with average prices climbing 7.4% over the year to £231,131. Scotland recorded annual growth of 3.6%, while Wales saw prices rise 1.6%.
However, the picture was far weaker across parts of southern England, where higher prices and affordability constraints continue to suppress demand. Property values in the South East fell 2% year on year, while Greater London recorded a 1.3% decline.
Amanda Bryden, head of mortgages at Lloyds, said the market had remained “steady” despite a difficult backdrop.
“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,” she said.
The fragile stability comes as mortgage rates have begun rising again after easing earlier in the summer.
Although the Bank of England held its base rate at 3.75% last week, policymakers warned inflation could accelerate later this year due to the impact of the Iran conflict on energy prices. The central bank signalled that prolonged inflationary pressure could force further interest rate increases.
Lenders have responded by increasing mortgage pricing, adding fresh pressure on households already facing stretched affordability.
For first-time buyers, the combination of higher borrowing costs and stubbornly high property prices continues to create a major barrier to entering the market.
Bryden said the outlook for the remainder of the year would depend heavily on mortgage rates and consumer confidence.
“We expect market activity and house prices to remain relatively stable over the remainder of the year,” she said.
But with global uncertainty pushing up inflation risks and borrowing costs, Britain’s housing recovery remains stuck in neutral — leaving buyers and sellers waiting for clearer economic signals before making their next move.
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