Key Takeaways
- House price data from Lloyds and Nationwide show very modest or no growth in June, while Rightmove says prices fell in July amid a “summer of distractions”.
- Mortgage rates have fallen since March, but remain subject to inflation and interest rate expectations.
- The new UK prime minister, Andy Burnham, has pledged an ambitious program of housebuilding in the coming years, which is likely to affect supply and demand dynamics.
UK house price surveys are giving mixed signals at this point of the year, with uncertainty surrounding the direction of mortgage rates and housing market sentiment for the rest of 2026.
Recent political changes, which could trigger more housebuilding, add another layer of complexity. While mortgage rates have started to fall since the outbreak of the Iran war, market forecasters have become more cautious. With interest rate cuts “off the table” and a prominent Bank of England rate setter saying rates should rise, it’s still unclear what the rest of 2026 has in store for home owners as well as those looking to buy their first property.
Fresh data from Lloyds House Price Index—formerly the Halifax House Price Index—shows average UK house prices rose 0.2% on a monthly basis in June and were 0.6% higher than the same month in 2025. This follows a rival house price survey by Nationwide on July 1, which showed no monthly growth in June, but annual growth of 2.2%, an acceleration from May. The differences can partly be explained by methodology and weightings given to house prices in different UK regions.
How Upbeat Are UK House Price Forecasts?
- Lloyds Banking Group originally said it expected house price growth of between 1% and 3% in 2026. In the second half of the year, it expects the UK housing market to “continue moving at a measured pace” supported by lower borrowing costs.
- Nationwide expected house price growth of between 2% and 4% in 2026. It now says if affordability continues to ease and “domestic political uncertainty” does not affect consumer confidence, the market should improve, “paving the way for a recovery in housing market activity in the coming quarters.”
- In December 2025, Rightmove said it expected a 2% increase in asking prices in 2026. It now reports slowing sales, market activity and falling prices amid a “summer of distractions”.
- Property portal Zoopla originally said it expected house price growth of around 1.5% in 2026. It now says it expects price growth to “ease further” before December, with sales “likely to finish 6-8% lower than 2025.”
- Estate agent Savills now expects a decline in the value of UK property this year before a rebound in subsequent years.
What Do the Latest Housing Market Surveys Show?
Lloyds and Nationwide surveys rely on mortgage lending figures, while Rightmove uses more recent asking prices to compile data. Its latest survey, released on July 20, has more downbeat news: Prices fell by 1% in July from June and were down 0.4% year over year. The property portal also said that sales agreed in the first half of the year were 6% lower than the same period in 2025.
Rightmove analyst Colleen Babcock said that sellers are competing with a “summer of distractions,” including sporting events and heatwaves. “While these diversions are short-term, they’re adding to what is already a distracting summer holiday period to create a challenging selling environment,” she said.
RICS, the trade body for chartered surveyors, said in its June residential property survey that buyer demand was still subdued, with new buyer inquiries showing a negative “net balance” in May, so more surveyors say there has been a decrease in new buyer enquiries rather than an increase.
“The majority of UK regions continued to post negative net balances in the latest report, highlighting the broad-based nature of the current softness in demand,” RICS says, with some of its respondents even highlighting the onset of an early summer and high temperatures as a factor in the market’s sluggishness.
Will Mortgage Rates Fall Further in 2026?
Mortgage rates have eased in recent months, even as UK interest rates have remained unchanged this year at 3.75%. According to Moneyfacts’ UK Mortgage Trends Treasury Report, the average two- and five-year fixed rates have fallen 0.16 and 0.11 percentage points in July and both reached 5.52%—their lowest points since the start of March 2026, when US strikes on Iran had just begun. The reduction is the biggest monthly fall since October 2024. Though there were still 307 fewer mortgage deals than there were at the start of March, product choice did rise by 45 deals to 7,177 this month.
Rightmove says the average two-year fixed mortgage rate was 4.92% in July, down from 5.07% in June but higher than 4.25% in February.
According to the Bank of England, nearly 750,000 households that currently pay less than 3% interest via pre-2022 products will have to remortgage in 2026. They will experience an average increase of £170 a month in repayments.
Any easing of mortgage rates makes buying a house more affordable, but with futures markets expecting two interest rate increases this year, significant improvements in affordability are hard to see. While tracker mortgages are priced off current interest rates, fixed-rate products usually reference interest rate futures, which spiked in March before falling back.
Mortgage deals also disappear quickly: The average shelf life of a mortgage deal is currently 14 days. That’s one day lower than in June, Moneyfacts says.
With the new prime minister expected to make major changes to taxation and personal finance to ease the cost of living, however, attention in the UK housing industry turns back to Whitehall, with domestic policy change now cited as a challenge by both lenders and brokers.
