The uptick marked the first increase in house prices in four months, according to Lloyds Banking Group data.
Annual growth was slightly stronger at 0.6%, up from 0.5% in May, data from the Lloyds House Price Index – formerly Halifax – showed. However, on a quarterly basis, values declined by 0.4%.
For first-time buyers, annual price growth increased to 0.8% in June from 0.3% in May, with the average first-time property now costing £240,433.
Northern Ireland and Scotland saw the highest annual percentage rise in house prices, at 7.9% and 3.9% respectively. Welsh house prices grew by 0.9% annually, with price growth in England concentrated in Northern regions.
The North East, North West and East Midlands saw growth of 2.8%, 2.4% and 1.1%. Meanwhile, the South East experienced a 2% annual fall in property prices, followed by the South West with a 1.3% drop.
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Economic uncertainty
June closed with a nosedive in mortgage approvals, according to the Bank of England’s Money and Credit report. Some 56,200 mortgages were approved for house purchases in May, down from 66,000 in April – the lowest level of mortgages approved in a month since the end of 2023, reflecting the impact of higher mortgage rates in April. Mortgage rates have since begun to fall.
Amanda Bryden, head of mortgages at Lloyds, said: “Recent [house] 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.
“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.”
Commenting on the housing data, Sarah Coles, head of personal finance at AJ Bell, said: “The newly rebranded house price index started with a whimper, not a bang. On the plus side, house prices rose for the first time in four months. On the downside, they were only up a whisker, and the signs for the rest of the summer don’t look particularly hot either.
“The small rise in prices in June will owe something to the Iran peace agreement, which lowered inflation expectations and brought mortgage rates down. It’s likely to have meant borrowers were able to squeeze more out of their monthly budget, and make a higher offer on their new home.
“However, one swallow doesn’t make a summer, and one small bump doesn’t mean the end of tougher times for the property market. 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.”
Savills’ forecast expects that mainstream house prices will fall by 2% this year, with growth expected to pick back up again in 2027.
