House prices across the UK have risen for the first time since the outbreak of the Iran war, with the typical property costing £299,330 in June – a 0.2% increase on the month before, according to the latest Lloyds house price index.
June’s monthly gain, the first since February when prices rose 0.3% to £301,051, came after a 0.2% drop in May. Annual growth edged up to 0.6% from 0.5%. Prices remain narrowly below their level at the start of the year (£300,283) and below the February peak.
“UK house prices rose 0.2% in June, first monthly gain since Iran war began, says Lloyds.”
The war began with surprise US-Israeli missile strikes on Tehran on 28 February, unleashing four months of conflict. A fragile ceasefire is now in place as the US and Iran try to negotiate a permanent peace deal. Oil prices initially soared, pushing up inflation and reversing expectations of interest rate cuts from the Bank of England. But oil has 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, though 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 Axios.
Amanda Bryden, 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.”
For first-time buyers, annual price growth rose to 0.8% in June from 0.3% in May. The average first-time buyer property now costs £240,433, suggesting demand remains resilient, Lloyds said.
Tom Bill, head of UK residential research at Knight Frank, said: “House prices are going sideways and transactions are falling as the result of higher mortgage rates since the start of the Middle East conflict.”
Iain McKenzie, chief executive of The Guild of Property Professionals, said: “The return to monthly house price growth is an encouraging sign that the market continues to demonstrate resilience despite a challenging economic backdrop. Buyers remain cautious, but we’re seeing confidence gradually improve as inflation remains relatively contained and expectations for interest rates have become more stable.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Lenders continue to slowly chip away at their mortgage rates, which is giving hope to borrowers and encouraging activity. However, buyers are not getting carried away – the small uptick in average house prices indicates that buyers are negotiating hard and not willing to pay more than they need to.”
Nicky Stevenson, managing director at Fine & Country, said: “A monthly increase of 0.2% is modest, but that is no bad thing in the current climate. Buyers are still navigating affordability pressures.”
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.”
