House prices hold steady despite impact of higher interest rates
- House prices were unchanged in September (0.0%), following a -0.3% fall in August
- The average property price is now £298,441, compared to £298,395 in August
- Prices were also unchanged annually (0.0%) compared with September last year
- Northern Ireland continues to lead UK annual growth, at +7.4%
- Latest first-time buyer prices reveal what a 2.5% deposit could look like under the Government’s new Your First Home scheme
Andrew Asaam, Mortgages Director at Lloyds, said:
“UK house prices were unchanged in September (0.0%), following a -0.3% fall in August. The average property now costs £298,441, while annual growth also remained flat at 0.0%.
“While the market overall has been fairly subdued, property prices have so far proved resilient during a period of higher mortgage rates, which has been driven by changing expectations around the future path of Base Rate. That’s mirrored in wider economic data, with household spending holding up better than many expected despite energy and other cost pressures arising from the Middle East conflict.
“Whether that picture continues is likely to depend on how confident consumers feel that the latest cost‑of‑living pressures will prove temporary. Confidence has long been a key driver of housing market activity, and will play an important role in shaping demand over the remainder of this year and into 2027.
“For now, the housing market appears to be balancing buyer caution with continued underlying demand. While higher mortgage rates and wider economic uncertainty are encouraging some people to take a more measured approach, new enquiries from prospective buyers are now at their highest since February. That should help sustain activity in the near term, with any movement in house prices likely to remain modest.”
First-time buyers and new Your First Home scheme
The average UK first-time buyer property price was broadly unchanged in September at £236,779, up marginally from £236,568 in August. However, this remains below the record high of £241,244 reached in February.
Saving for a deposit remains one of the biggest barriers to homeownership for many first-time buyers. New measures, such as the Government’s recently announced Your First Home scheme for eligible new-build properties in England, alongside the growing availability of low-deposit mortgage products from lenders, could help more aspiring homeowners take their first step onto the property ladder sooner.
These would be the typical 2.5% deposits required across each English region under the proposed scheme, based on the latest average first-time buyer property prices in September.
| Regions in England | Average FTB price | 2.5% deposit |
| East Midlands | £201,460 | £5,037 |
| Eastern England | £269,374 | £6,734 |
| Greater London | £455,213 | £11,380 |
| North East | £142,510 | £3,563 |
| North West | £202,315 | £5,058 |
| South East | £297,575 | £7,439 |
| South West | £238,136 | £5,953 |
| West Midlands | £215,725 | £5,393 |
| Yorkshire and the Humber | £171,661 | £4,292 |
| UK average | £236,779 | £5,919 |
While the scheme has been announced, full eligibility criteria, income caps, local property price caps and implementation details are not expected to be confirmed until the Budget in October.
Nations and regions house prices
Northern Ireland continues to lead the UK, with annual house price growth increasing to +7.4% from 6.8% last month. The average property value has also reached a new record high of £231,917.
Scotland continues to post solid growth, with prices up +3.4% over the past year to an average of £223,330. Growth has also strengthened in Wales, rising to +1.2%, with the typical property now valued at £231,287.
In England, the strongest annual growth remains in the north. The North East recorded growth of +2.4%, taking the average property price to £184,546, while the North West saw prices rise +1.9% to £248,932.
The West Midlands was the only other English region to see positive annual growth, at +0.8%, with the average property value of £260,892.
By contrast, house prices remain under pressure across much of southern England, where higher average property values continue to present a greater affordability challenge.
Greater London recorded the largest annual decline, down -2.2% year-on-year to £531,548, closely followed by the South East, down -2.1% to £380,829. Prices in Eastern England fell -1.6% to £330,151.
Nathan Emerson, CEO of Propertymark, comments:
“Against a backdrop of continued pressure across the global economy, it is perhaps unsurprising to see some fluctuation in domestic house prices. It is important to remember that, over a prolonged period, house price growth is rarely a straightforward upward trend. The market will inevitably experience periods of change as wider economic conditions, base rates, inflation and consumer confidence influence the decisions of buyers and sellers.
“With the Autumn Budget now just weeks away, there will be close attention on whether the UK Government introduces measures that offer greater certainty to those looking to buy or sell. A supportive environment could help provide the confidence needed for more people to make decisions about their housing plans.
“Support for first-time buyers would be particularly welcome, given the ongoing challenges many face in saving for a deposit and meeting affordability requirements. At the same time, measures that encourage continued investment in housing will be important to ensure supply keeps pace with future demand and that the market remains resilient over the longer term.”
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Breaking Property News 5/10/26
