House prices across the UK have risen for the first time since before the onset of the Iran war, leaving property values narrowly below those at the start of the year, according to a survey.
The typical property cost £299,330 in June, a 0.2% increase on the month before. This came after a monthly drop of 0.2% in May, according to the latest Lloyds house price index, previously known as the Halifax HPI. The annual growth rate edged higher to 0.6% from 0.5%.
June’s rise in prices was the first monthly gain since February, when prices increased 0.3% to £301,051, but still below levels then and in January, at £300,283.
Amanda Bryden, the head of mortgages at 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.”
The surprise US-Israeli missile strikes on Tehran on 28 February unleashed a four-month war, with a fragile ceasefire now in place while the US and Iran try to negotiate a permanent peace deal. The war initially sent oil prices soaring and pushed up inflation, which meant predictions of interest rate cuts turned to expectations of rate increases from the Bank of England.
Oil prices have since fallen back to around prewar levels, with Brent trading about $72 a barrel on Tuesday, up 1.1%. The strait of Hormuz has reopened, allowing tankers that were stranded there to pass through, although the situation remains shaky.
Iran’s military fired at least two missiles at commercial ships transiting the strait on Monday night, two US officials told the US news site Axios.
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, suggesting demand remains resilient, Lloyds said.
Bryden said: “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.”
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Northern Ireland continues to record the strongest annual house price growth in the UK. Average prices were up 7.4% over the past year, to £229,000. Scotland had the next highest annual growth, at 3.9%, with an average price of £223,277.
In Wales, property price growth strengthened again to an annual rate of 0.9%, taking the typical home value to £231,142.
In England, stronger price growth remained concentrated in northern regions. In the north-east, prices rose 2.8% over the year to £181,133, while the north-west recorded annual growth of 2.4%, with the average property now costing £248,218.
By contrast, prices continued to fall in the south. The south-east led declines, with prices down 2% year on year to £381,654, while average values in London fell by 1.1% to £534,831.