What is going to happen to UK house prices?

If you are planning to buy or sell a house, you will be interested to know what is likely to happen to house prices and whether now is a good time to move. Whether you already own a property or are a first-time buyer, an adjustment in house prices can be beneficial. A drop in price in the area you wish to buy in can save you money, whereas a rise in your current property's value means you can secure a good price and have more capital to invest in your next purchase.

House prices are determined by a number of factors, including:

• The overall health of the economy - The unemployment rate and wage growth both play a part in consumer confidence, which impacts how confident people are to move and how much they are willing to pay.
• Interest rates -The Bank of England sets the base interest rate level and, if it is relatively low, people can afford to spend more on a property as the cost of borrowing is lower. This tends to push house prices up. Conversely, once rates start going up, mortgages become more expensive and house prices tend to fall as fewer people opt to move.
• Supply and demand - Local house prices will be determined by how desirable a particular location is and how many similar properties are available. If, for example, a new housing development is completed, this can reduce the value of properties nearby as there is greater competition for buyers. Conversely, some properties will always command a premium because they are in a sought-after area where the housing stock is limited.

What has been happening to house prices?

There are several reputable sources of data on house prices, including monthly indices that provide information on changes in house prices over the previous month and the preceding 12 months. Below is a summary of each published index.

The UK House Price Index

The UK House Price Index is the most accurate of the various house price indices, as it is calculated based on completed sales, including both cash sales and those with a mortgage. The wide-ranging data is sourced from HM Land Registry and other government sources. However, while it provides a clear picture of what is happening in the housing market, there is a lag in the data being published. The latest available data relates to April 2026.

The latest data shows that the average house price in the UK currently stands at £270,000. House prices have increased 3.8% over the 12 months to April 2026.

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Nationwide House Price Index

The Nationwide House Price Index is calculated using its own mortgage approvals data. House prices were broadly flat in June 2026 (after accounting for seasonal effects) compared with the previous month. The annual change in house prices currently stands at +1.7%.

Nationwide said, “It is not surprising that the market has softened a little in recent months, given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates. Indeed, consumer confidence and measures of housing sentiment have weakened, and mortgage approvals fell noticeably in May.

“While geopolitical tensions remain high, the signing of a memorandum of understanding between Iran and the US helped push oil prices back towards the levels prevailing before the conflict began.

“If the energy shock continues to subside, the Bank of England may not need to raise interest rates, or at least by less than had previously been anticipated - a view reinforced by the fact that UK inflation has also been lower than expected in recent months.

“In recent weeks a shift in market expectations for the future path of Bank Rate has helped to bring down the market interest rates which underpin fixed-rate mortgage pricing.

“If maintained, these trends will help to restore household confidence and ease affordability constraints, paving the way for a recovery in housing market activity in the coming quarters, providing that domestic political uncertainty does not adversely impact sentiment“.

Lloyds House Price Index

The Lloyds House Price Index (previously known as the Halifax House Price Index) is calculated from its own database of approximately 300,000 mortgage approvals. Recent data reveals that average house prices fell by 0.1% in May. The latest figures reveal an annual change of +0.5%.

Lloyds said “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.

“While latest industry data shows the number of new mortgage approvals dropped in May, this wasn’t unexpected given the spike in rates seen earlier this year, and we’d expect to see activity recover assuming borrowing costs continue to fall.

“For first-time buyers, 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, suggesting demand remains resilient.

“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.”

Rightmove House Price Index

Unlike the other indices that are based on mortgage approval data or completed sales, the Rightmove House Price Index looks at the average asking prices for properties listed on the Rightmove portal. This is a good reflection of sellers' confidence but doesn't clearly demonstrate how many of those properties end up going under offer at a much lower price or, in fact, don't end up selling at all. Its most recent data show that the average asking price fell by 0.6% in June 2026, and prices were 0.5% lower than the same period last year.

Rightmove said "While June typically sees modest price increases, with a 0.1% average over the last ten years, this month’s decline suggests that many new sellers are adjusting their price expectations in response to high levels of competition and more price-sensitive buyers. Summer is typically slower than the spring, with more buyers distracted by sporting events, holidays and better weather, and therefore needing to be tempted by sellers with an attractive price. However, the national price trend doesn't always reflect regional and local market differences, particularly where affordability pressures vary. Prices have fallen across all southern England regions and Wales, while the more affordable northern areas such as the North East and Scotland are holding up better compared to this time last year. The number of homes for sale remains at historically high levels for this time of year, driving price falls as competition to attract a buyer remains fierce among sellers. In a market where choice is high and buyers are more selective, pricing correctly from the outset is increasingly important, with over a third of new listings that come to market not going on to sell“.

"It’s unusual to see a price fall of this size in June, as we would normally expect to see modest price growth at this point in the year. What’s different this time is a combination of factors, including wider economic uncertainty, the timing of the May bank holiday and unusual heatwave, and the high number of homes on the market, which together appear to be bringing forward the traditionally slower summer market. In this kind of market, sellers need to work harder to attract attention. Setting a competitive asking price from the outset is key, as buyers are taking more time to compare options and are quick to move on if a home doesn’t stand out on value. When sellers are over-optimistic on price and find they need to reduce later to sell, it can be harder to regain momentum, which underlines just how important it is to get the pricing right from day one“.

What is driving the change in house prices?

The housing market has been tumultuous over the past 5 years, with the pandemic having a direct impact on house prices. Initially, there was a slump as the country entered into lockdown for the first time in March 2020 before a massive resurgence from June 2020, when society began opening up again. A key driver was the introduction of a temporary stamp duty holiday on 8 July 2020, which offered buyers a saving of up to £15,000 on their tax bill when purchasing a house. This acted as a stimulus, ironically driving house prices up by an average of £15,409 between June and November 2020, according to figures from the Halifax, in effect wiping out the stamp duty saving.

The main stamp duty holiday ended at the end of June 2021, with a tapering until the end of September 2021, during which time buyers could save a maximum £2,500 off their bill. There was a corresponding uptick in house prices in the run-up to the deadlines for the end of each of these phases and, overall, there was double-digit annual growth across 2021. This was bolstered by historically low mortgage rates, as well as the reintroduction of higher loan-to-value mortgage deals.

However, the mini-Budget presented by former Chancellor Kwasi Kwertang on 23rd September 2022 sent shock waves through the mortgage market resulting in a rapid increase in mortgage interest rates. In August 2024, the Monetary Policy Committee (MPC) voted to cut interest rates to 5.00%, having kept rates at 5.25% for the previous seven meetings (September, November, December, February, March, May and June). In November 2024, rates were cut by 0.25% and they were cut by a further 0.25% in February, May, August and December 2025, before being held in January, March and April 2026. It means the Bank of England base rate currently stands at 3.75%.

Markets had predicted another rate cut before the end of the year, and many major lenders had been pricing it in when releasing their latest mortgage deals; however, the situation in the Middle East has prompted a complete reversal. The Bank of England has warned of the possibility of six further rate hikes, with the sentiment being that rates are likely to remain 'high for longer'.

We recently reported that a number of major lenders have recently eased mortgage affordability checks, allowing mortgage applicants to borrow more. Additionally, lower mortgage costs will likely mean that there will be more prospective purchasers able to secure a mortgage, thus putting upward pressure on house prices. 

Is now a good time to move house?

Estate agents have warned that there is a 'decade-high' number of homes currently on the market, and a third of homes already on the market have had their asking price reduced by an average of 7%. With house prices still at elevated levels, we could see them trending downwards over the coming months, which, if you are a first-time buyer or moving to a new area, could save you money if you decide to wait. If, however, you are a mover and have to sell your current property, it may pay to make the most of the tail-end of this recent house price boom.

How do I know what my property is worth?

While it is useful to consider the broader market trends for the UK, it's also important to work out what is happening in your local area if you are planning to buy or sell a property. There can be a great deal of variation in the price of a house on one street compared to the same style of house on an adjacent street, so it pays to do your homework. Good sources of information include:

• Property websites - Sites such as Rightmove and Zoopla have features that give you an estimate of what your house is worth based on its sales history and what other local properties have sold for. These tools are not completely accurate but give you a good starting point to work out how much you could reasonably expect to sell your house for
• Land registry data - It is possible to access the sold prices for all the properties in your local area, sorted by how long ago the property sold. This gives a good indication of what properties are actually selling for, compared with the asking prices that they are being marketed at.
• Estate agent - A good local agency with properties on its books similar to the one you are trying to sell will be able to give you the best idea of what you are likely to be able to sell your property for. It is a good rule of thumb to get valuations from a few different agents as there could be some variation in the valuations they provide. Read our article: How to find the best & cheapest local estate agent in seconds.