UK property market warned over 'gathering dark clouds' as house prices stall amid rising mortgage rates

House prices across the UK failed to grow in September, an index has found, with prices showing no movement either month on month or compared with a year earlier.

The typical home was valued at £298,441 in September, according to the Lloyds index.

Mortgage costs have been climbing at the same time, with the average five-year fixed homeowner mortgage rate reaching the 6% mark on Monday for the first time in three years, financial information website Moneyfacts said.

Lloyds recorded a 0.0% month-on-month change in property values in September, after a 0.3% fall in August.

The annual picture was similarly flat, with the index showing a 0.0% change against September last year, following a 0.4% annual dip in August.

Andrew Asaam, mortgages director at Lloyds, said: “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 (the Bank of England) 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.”

Ian Futcher, a financial planner at wealth manager Quilter said: “Lloyds’ latest house price index shows UK property prices flatlined in September, leaving annual growth flat at 0.0% and the average home valued at £298,441.

“The market is facing gathering dark clouds on several fronts, with affordability, confidence and borrowing costs all coming under pressure, which is in turn causing house prices to stall.

“The forthcoming Budget is adding another layer of uncertainty, with some buyers choosing to sit on their hands until there is greater clarity on the Government’s tax and housing policy agenda.

“When purchasing a home is one of the biggest financial decisions a person will ever make, uncertainty alone can be enough to delay a move by weeks or even months.

“The ongoing conflict involving Iran continues to cast a long shadow over the economic outlook.

“Concerns that elevated energy prices and broader geopolitical uncertainty could keep inflation higher for longer have filtered through to financial markets, raising questions about the path of future interest rates and leaving households facing a more uncertain economic backdrop.

“These concerns are already feeding through to the mortgage market. Borrowers who only a few months ago were becoming more optimistic about the prospect of cheaper borrowing are now seeing that outlook shift significantly.”

Nathan Emerson, chief executive at property professionals’ body Propertymark, said: “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.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The high cost of fuel and rising energy bills, combined with uncertainty surrounding the upcoming Budget, as well as the prospect of higher mortgage payments, are all giving buyers reason to pause.”

Amy Reynolds, head of sales at London-based estate agency Antony Roberts, said: “Buyers are still out there, but they’re being careful.”

Here are average house prices and the annual change, according to Lloyds (the regional annual change figures are based on the most recent three months of approved mortgage transaction data):