Average property values rise for first time in four months – will it last?

Average house prices have increased for the first time since the outbreak of the Iran war in a boost for homeowners.

The newly-named Lloyds House Price Index, rebranded since the bank retired the Halifax name, showed average property values rose 0.2% in June.

The slight rise in house prices is an improvement on the previous month’s 0.2% fall, while annual growth was at 0.6% compared with 0.5% a month before.

This put average UK house prices at £299,330.

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It is the first monthly rise in average prices since February as confidence has been dented by the Iran conflict.

But hopes of a peace agreement and lower swap rates may now be filtering into the housing market and mortgage pricing, helping to boost demand.

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.”

Affordability remains stretched for many buyers, said Bryden, but this has been mitigated by mortgage rates easing from their recent highs.

“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,” Bryden added.

Where are house prices rising?

The housing market has been quieter in recent months as the volatility caused by geopolitical tensions has pushed up swap rates, making mortgages more expensive and hitting buyer demand.

More stock is also on the market, which some attribute to a landlord exodus linked to the Renters’ Rights Act.

Higher supply and reduced demand has pushed price growth down.

But there have been signs of life in the housing market more recently as tensions have eased in the Middle East.

Northern Ireland continues to record the strongest annual house price growth in the UK, with average prices up 7.4% over the past year to £229,000, Lloyds said.

Scotland has the next highest annual growth at +3.9%, with an average price of £223,277.

In Wales , property price growth has strengthened by 0. 9% on annual basis to £ 231,142.

Meanwhile in England, stronger price growth remains 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 now costing £248,218.

In contrast, southern markets continue to see prices fall. The South East led declines, with prices down 2% year-on-year to £381,654, while London saw average values fall by 1.1% to £534,831 .

Will house prices rise in 2026?

The housing market has struggled to get going in 2026 and while the latest price rise may look good if you are hoping to sell your property, analysts remain cautious.

Amy Reynolds, head of sales at Richmond-based estate agency Antony Roberts, said “On the ground, the picture is more nuanced than national headlines suggest.”

While the rate-dependent end of the market is exhibiting caution, well-priced family homes in the right roads are still seeing sustained interest from cash- or equity-rich buyers.

Reynolds suggests there is the familiar pre-summer push from families wanting to be settled before the new school year, but warns that the mood is steady and selective rather than booming or stalling, adding: “We expect a quieter, price-sensitive summer, with activity firming again in the autumn once buyers have more clarity on rates and the geopolitical noise has died down.”

Sarah Coles, head of personal finance at AJ Bell, said the small rise in prices in June will owe something to the Iran peace agreement, which lowered inflation expectations and brought mortgage rates down, but warns that one swallow doesn’t make a summer.

“One small bump doesn’t mean the end of tougher times for the property market,” said Coles. “There’s still a huge amount of global uncertainty as the peace deal remains fragile. Closer to home, the picture has started to look marginally more positive, with unemployment falling a little and economic growth edging up. But this is unlikely to move the dial just yet.”

Coles highlights that unemployment has been trending up for the past four years and while economic growth might be positive right now, real household disposable income still fell in the first three months of this year, so prospective buyers may be feeling overstretched already.

Bryden is a bit more optimistic, saying: “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.”