| Higher borrowing costs and economic uncertainty continue to weigh as mortgage rates remain unpredictable | Lloyds’ House Price Index showed the average UK property price was just 0.1% higher than a year earlier | The autumn market is likely to remain price-sensitive, with affordability continuing to influence decisions |
As we move into autumn, the UK housing market remains relatively subdued. Higher borrowing costs and economic uncertainty continue to weigh on demand, while house prices have shown little movement. However, the market remains active, with buyers and sellers continuing to adjust to the current environment.
Lloyds’ August House Price Index (formerly Halifax House Price Index) showed the average UK property price was £298,468. This was 0.4% lower than a year earlier, the first year-on-year decrease since November 2023. Prices have remained within a narrow range for almost two years, highlighting the impact of affordability pressures and higher borrowing costs.
Savills expects mainstream UK house prices to fall by 2% across 2026, before returning to growth of 2.5% in 2027. It expects the recovery to build as affordability improves and economic conditions become more supportive.
The outlook for mortgage rates remains difficult to predict. Average fixed rates increased again during July and into August, although some lenders have subsequently reduced selected deals.
The Bank of England held Bank Rate at 3.75% in September, but mortgage rates do not necessarily move in line with Bank Rate. Market expectations, swap rates and lender competition can all influence the cost of fixed-rate borrowing.
While buyers continue to have a reasonable choice of existing properties, the supply of new homes remains a concern. Rightmove reports that the number of new-build developments coming to market is at its lowest level since January 2017. It says this highlights a shortage of homes in the right places and at affordable price points.
The autumn market is likely to remain price-sensitive, with affordability continuing to influence decisions. Buyers may have opportunities to negotiate, while sellers will need realistic expectations. With mortgage rates still uncertain, taking advice and focusing on what is affordable over the longer term may be more valuable than trying to predict where the market will move next.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.
