UK house prices were unchanged in September compared with both August and a year earlier, according to figures released by Lloyds on Wednesday.
The Lloyds House Price Index put the average property price at £298,441. Prices were down 0.2% on a quarterly basis.
The flat monthly reading followed a revised 0.3% decline in August, suggesting a subdued market rather than a return to sustained growth.
Reuters reported that the figures were weaker than economists had expected. Its poll had forecast a monthly increase of 0.1% and annual growth of 0.2%.
Borrowing costs constrain buyers
Lloyds mortgages director Andrew Asaam said higher mortgage rates and economic uncertainty were encouraging some buyers to proceed cautiously.
However, the lender said underlying demand remained, with new enquiries from prospective buyers at their highest level since February. Asaam identified consumer confidence and expectations about living costs as important influences on activity over the coming months.
ITV News reported, citing Moneyfacts, that the average five-year fixed homeowner mortgage rate reached 6% on Monday for the first time in three years.
Mortgage broker Coreco’s chief executive, Andrew Montlake, told ITV that affordability remained central to the market’s outlook. He said elevated borrowing costs could require sellers to take a realistic approach to pricing and buyers to focus on their monthly budgets.
Regional markets move differently
The national result masks contrasting local trends.
According to the regional figures published by ITV, Northern Ireland recorded annual growth of 7.4%, with an average property price of £231,917. Scotland’s prices rose 3.4%, while Wales recorded growth of 1.2%.
London experienced an annual decline of 2.2%, with an average price of £531,548. Prices in the South East fell 2.1%, while Eastern England recorded a 1.6% decline.
The regional annual comparisons use the latest three months of approved mortgage transaction data. They should not be interpreted as changes occurring in September alone.
Understanding the index
Lloyds calculates a standardised price to compare similar properties over time, with seasonal adjustments. The index was previously branded Halifax; its name changed in July, while its methodology remained unchanged.
Trivane View
Stable prices offer little reassurance if the cost of financing a purchase rises. Affordability depends on mortgage repayments, deposits, and household income as well as the asking price. The national average also gives a limited guide to individual buyers when regional markets are moving in different directions.
