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GB: Lloyds House Price Index
| Actual | Previous | Revised | |
| Month over Month | -0.2% | 0.0% | -0.1% |
| Year over Year | -0.4% | 0.1% |
Highlights
The UK housing market remained subdued in August, with average prices declining by 0.2 percent to £298,468, following a 0.1 percent fall in July. The 0.4 percent annual contraction, the first since November 2023, signals weakening momentum rather than a sharp correction, as prices remain 0.2 percent higher than at the start of the year and approximately 25 percent above their late-2019 level. Higher borrowing costs, inflationary uncertainty and mortgage approvals falling to their lowest level since early 2024 have constrained activity. Nevertheless, limited pressure on homeowners to sell has created a stand-off as sellers resist lower offers while buyers await clearer economic conditions. Consequently, adjustment is occurring mainly through fewer transactions rather than substantial price reductions.
Regional performance remains sharply divided. Northern Ireland led annual growth at 6.9 percent, followed by Scotland at 3.5 percent, while northern English regions also recorded moderate increases. Conversely, affordability pressures weighed heavily on southern England as prices fell by 1.6 percent in the South East, 1.5 percent in London and 1.2 percent in both the South West and Eastern England. The near-term outlook is therefore likely to remain restrained, although wage growth, resilient employment and limited forced selling should help prevent a severe nationwide decline.
Definition
The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and the basic methodology remain unchanged. However, in May 2020, the annual growth measure was changed from the average of the last three months to just the latest month.
Description
Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.