UK House Prices See First Increase Since Iran Conflict
Property prices across the UK have risen for the first time since before the onset of the Iran war, leaving property values slightly below those at the start of the year, according to a recent survey.
The typical property price reached £299,330 in June, marking a 0.2% increase compared to the previous month. This followed a 0.2% monthly decline in May, as reported by the latest Lloyds house price index, formerly known as the Halifax HPI. The annual growth rate also edged up to 0.6% from 0.5%.
June’s price increase was the first monthly gain since February, when prices rose 0.3% to £301,051, though current levels remain below those recorded in February and January, which stood at £300,283.
Economic Uncertainty and Market Outlook
Amanda Bryden, head of mortgages at Lloyds, commented on the trends:
“Recent price trends continue to reflect wider economic uncertainty, including the impact of global events on inflation and interest rate expectations.
While affordability remains stretched for many buyers, mortgage rates have eased from their recent highs, offering some encouragement to those considering a move.”
The unexpected US-Israeli missile strikes on Tehran on 28 February triggered a four-month conflict, with a fragile ceasefire currently in place as the US and Iran negotiate a permanent peace agreement. The war initially caused oil prices to surge and inflation to rise, shifting expectations from interest rate cuts to increases by the Bank of England.
Since then, oil prices have declined to near prewar levels, with Brent crude trading around $72 a barrel on Tuesday, up 1.1%. The Strait of Hormuz has reopened, allowing previously stranded tankers to pass, although the situation remains unstable.
On Monday night, Iran’s military reportedly fired at least two missiles at commercial ships, according to two US officials cited by the US news site Axios.
First-Time Buyers and Regional Price Trends
For first-time buyers in the UK, annual price growth increased to 0.8% in June from 0.3% in May, with the average first-time buyer property now costing £240,433, indicating resilient demand, Lloyds noted.
Bryden added:
“Looking ahead, we expect the housing market to continue moving at a measured pace. Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor. The outlook for house prices will depend largely on inflation continuing to ease and household confidence gradually improving.”
Northern Ireland continues to experience the strongest annual house price growth in the UK, with average prices rising 7.4% over the past year to £229,000. Scotland follows with the next highest annual growth at 3.9%, and an average price of £223,277.
In Wales, property price growth strengthened to an annual rate of 0.9%, bringing the typical home value to £231,142.
In England, stronger price growth was concentrated in northern regions. The North East saw prices rise 2.8% over the year to £181,133, while the North West recorded annual growth of 2.4%, with the average property costing £248,218.
Conversely, prices continued to decline in southern regions. The South East led the decreases, with prices down 2% year on year to £381,654, while average values in London fell by 1.1% to £534,831.
