UK house prices flat in July, says Lloyds, as buyers struggle with affordability

Property prices in ‘suspended animation’ owing to higher mortgage rates and uncertainty in Middle East

UK house prices were broadly stagnant in July as prospective buyers were squeezed by higher mortgage rates, uncertainty around the Middle East and stretched affordability, according to the lender Lloyds.

The average property cost £299,253 in July, down by £143 compared with June, the bank’s monthly index found.

Prices are only 0.1% higher compared with a year ago, the weakest rate of annual growth since November 2023, Lloyds said.

Amanda Bryden, the head of mortgages at the lender, said many would-be buyers were struggling with affordability, especially as recent events in the Middle East prompted a rise in mortgage rates.

“While housing demand remains broadly steady, activity continues to respond quickly to changes in mortgage rates,” she said. “Looking ahead, we expect market activity and house prices to remain relatively stable over the remainder of the year. Developments will be shaped by both how mortgage rates respond to the outlook for inflation and wider household confidence.”

Rising tensions in the Middle East have stoked fears around inflation, feeding expectations of interest rate rises this year. The average rate for a two-year fixed residential mortgage rate stood at 5.63% on Friday, according to the market tracker Moneyfacts, while the average five-year deal was 5.67%. Both were below 5% at the start of the year.

Anthony Codling, an analyst at the broker RBC Capital Markets, said the Lloyds research showed a narrative of “suspended animation”.

“Prices are neither falling sharply nor rising with any conviction, trapped in a narrow two-year range by the twin vices of stretched affordability and mortgage rates that refuse to fall far enough for long enough,” he said. “The market is not in crisis, but the green shoots that flickered briefly in early 2026 have wilted.”

Northern Ireland remained the best performer across the UK, Lloyds found. House prices grew by 7.4% compared with last year, with the average hitting £231,131.

Prices in Scotland rose by 3.6% to an average of £223,246, while in Wales annual growth stood at 1.6%, with the average property value at £231,458.

In England, price growth was strongest in the north, with the north-east reporting annual growth of 2.8%, taking the average to £182,488, while prices in the north-west rose 2.1% to £247,836.

The weakest areas were in the south-east, where prices fell 2% to an average of £381,146, and Greater London, which recorded a 1.3% decline to £533,930.

Nicholas Finn, a managing director at the London estate agent Garrington Property Finders, said England’s north-south property divide was “becoming more entrenched”.

“In southern areas, a glut of supply is attracting too few serious buyers, and this is steadily dragging down prices,” he said. “In northern England, the forces of supply and demand are more balanced. The buzz surrounding No 10 North , and the prospect of job creation and government investment in northern areas, are boosting sentiment and supporting the upward trajectory in prices.”