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Slower house price growth is offering some relief as a new first-time buyer scheme takes shape.
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UK house prices flat after first annual fall since 2023. What happens next?
Oct 07, 2026
- Average UK house price stood at £298,441 in September, virtually unchanged from August.
- London prices fell 2.2 per cent over the year, the biggest regional decline.
- Northern Ireland recorded the strongest annual growth at 7.4 per cent.
UK house prices stalled in September as higher mortgage costs and economic uncertainty encouraged buyers to remain cautious.
The average property price was £298,441, broadly unchanged from £298,395 in August, according to the latest Lloyds house price index. Prices were also unchanged compared with September last year, following a 0.3 per cent monthly fall in August.
The result was weaker than economists had expected. A Reuters poll had pointed to a 0.1 per cent monthly increase and 0.2 per cent annual growth.
The figures underline how quickly the UK housing market has lost momentum as mortgage rates have risen.
Why have UK house prices stalled?
Higher mortgage costs are becoming an increasingly important factor for prospective buyers.
The Bank of England has kept its base rate unchanged, but mortgage rates have risen as lenders face higher market borrowing costs and financial markets have increased their expectations of future rate rises.
That has made it harder for some buyers to stretch their budgets, while existing homeowners coming off cheaper fixed-rate deals face the prospect of higher monthly payments.
Lloyds mortgages director Andrew Asaam said the market was currently “balancing buyer caution with continued underlying demand”.
He added that new enquiries from prospective mortgage borrowers were coming in at their fastest pace since February, suggesting that demand has not disappeared despite the tougher borrowing environment.
Asaam said house prices had so far proved resilient during a period of higher mortgage rates, but warned that consumer confidence would be important in determining how demand develops over the rest of the year and into 2027.
“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,” he said.
Where are UK house prices rising and falling?
The national figure hides a significant regional divide.
Northern Ireland recorded the strongest annual growth, with prices rising 7.4 per cent. Scotland also continued to perform strongly, with prices up 3.4 per cent over the year and the average property worth £223,330.
Wales recorded annual growth of 1.2 per cent, taking the typical property value to £231,287.
The picture was very different in southern England.
Greater London recorded the biggest annual decline, with prices down 2.2 per cent to an average £531,548. The Southeast followed with a 2.1 per cent fall to £380,829, while prices in eastern England dropped 1.6 per cent to £330,151.
The figures continue to highlight the different pressures facing Britain's housing markets. More expensive southern regions are particularly exposed to affordability constraints because buyers tend to require larger mortgages relative to their incomes.
Lloyds itself has previously highlighted the persistent north-south divide, with affordability pressures expected to keep growth more subdued in London and the Southeast.
What does this mean for first-time buyers?
The average property bought by a first-time buyer was worth £236,779 in September, almost unchanged from £236,568 in August.
That remains below the record average of £241,244 reached in February.
For first-time buyers, the combination of softer property prices and higher mortgage rates creates a mixed picture.
A lower purchase price can help reduce the size of the deposit and mortgage required, but higher borrowing costs can increase monthly repayments and make it harder to pass affordability checks.
That is one reason the market has not simply moved into a period of falling prices despite weaker demand.
Mortgage enquiries are still increasing, suggesting potential buyers are continuing to watch the market and prepare to move even as they become more cautious about the price they are willing to pay.
The next few months could therefore be shaped less by a sudden housing crash and more by a prolonged standoff between buyers facing higher borrowing costs and sellers reluctant to cut asking prices.
For now, the regional figures tell the clearest story: UK house prices have stalled overall, but the experience of buying or selling a home depends heavily on where in the country you are.
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