UK house prices were flat in September, according to the latest Lloyds house price index, following a 0.3% fall in August.
The average property now costs £298,441, compared with £298,395 a month earlier. Prices were also unchanged annually at 0.0%, while the quarter saw a 0.2% decline. Northern Ireland continued to lead the UK, with annual growth rising to 7.4% from 6.8% in August.
"UK house prices were unchanged in September (0.0%), following a -0.3% fall in August," said Andrew Asaam, mortgages director at Lloyds. "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."
Data reveals north-south divide
Scotland posted solid growth, with prices up 3.4% over the year to an average of £223,330. Growth strengthened in Wales to 1.2%, taking the typical property value to £231,287.
In England, the strongest annual growth remained in the north. The North East recorded a 2.4% rise, lifting the average price to £184,546, while the North West gained 1.9% to £248,932. The West Midlands was the only other English region with positive annual growth, at 0.8%, and its average property value stands at £260,892.
Prices remain under pressure across much of southern England, where higher property values present a greater affordability challenge. Greater London recorded the largest annual decline, down 2.2% to £531,548, followed by the South East, down 2.1% to £380,829. Eastern England fell 1.6% to £330,151.
First-time buyer prices and the Your First Home scheme
Lloyds' data puts the average first-time buyer property at £236,779 in September, up marginally from £236,568 in August but below the record high of £241,244 reached in February.
Lloyds said saving for a deposit remains one of the biggest barriers to homeownership for many first-time buyers. It added that the government's recently announced Your First Home scheme for eligible new-build properties in England, alongside growing availability of low-deposit mortgage products, could help more aspiring homeowners reach the property ladder sooner.
Under the proposed scheme, the typical 2.5% deposit would be £5,919 at the UK average first-time buyer price. By region, deposits would range from £3,563 in the North East to £11,380 in Greater London, with the South East at £7,439. Full eligibility criteria, income caps, local property price caps and implementation details are not expected until the Budget in October.
Industry reaction
"This year has been a story of rising energy prices and stalling house prices, as the unpredictable Middle East conflict unfolds and drives borrowing costs higher," said Tom Bill, head of UK residential research at Knight Frank.
"This month's Budget adds to the uncertainty as buyers and sellers wonder which of the recurring tax rumours proves to be true. We think downward price pressure will continue during the final months of the year as the impact of higher mortgage rates feeds slowly through to buyers."
"Against a backdrop of continued pressure across the global economy, it is perhaps unsurprising to see some fluctuation in domestic house prices," said Nathan Emerson, CEO of Propertymark.
"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."
