UK House Prices Flatline Amidst Economic Uncertainty

Mortgage rates edged higher again, reversing an earlier summer ease. The average two-year fixed residential mortgage rate hit 5.63% on Friday, with the average five-year deal reaching 5.67%.

Amanda Bryden confirmed affordability remains a challenge for many would-be buyers. Mortgage rates have edged higher again after easing earlier in the summer.

The Bank of England held its base rate at 3.75% last week, despite cautioning that inflation was set to rise by the end of the year due to the Iran war. The Bank of England signaled its readiness to hike if the conflict and its effects on prices were prolonged.

Experts claim higher mortgage rates, economic uncertainty, and weaker buyer confidence combine to cool activity. Amanda Bryden confirmed that trend has persisted even as buyers and sellers have faced a more uncertain economic backdrop this year.

Despite national stagnation, significant regional disparities persist across the UK. In England, the north-east reported annual growth of 2.8%, with average prices reaching £182,488, while the north-west rose 2.1% to an average of £247,836.

Conversely, prices in the South East fell 2% year-on-year, though prices in Scotland are up 3.6% year-on-year. Nicholas Finn claims that in southern areas, a glut of supply attracts too few serious buyers.

In northern England, the forces of supply and demand are more balanced, Finn claims. The buzz surrounding No 10 North, alongside the prospect of job creation and government investment in northern areas, boosts sentiment and supports the upward trajectory in prices, according to Finn.

Anthony Codling claims the market is not in crisis, but the green shoots that flickered briefly in early 2026 have wilted. Amanda Bryden claims average house prices have remained relatively stable for almost two years, moving within a narrow range and sitting just 0.5% higher than they were in November 2024.

Rumors about changes to property taxation, particularly council tax and stamp duty, circulated since Andy Burnham became Prime Minister. However, Prime Minister Andy Burnham ruled out a change to property taxation at the October Budget.

Looking ahead, Amanda Bryden expects market activity and house prices to remain relatively stable over the remainder of the year. Bryden added that developments will be shaped by both how mortgage rates respond to the outlook for inflation and wider household confidence.