UK House Prices Increase for the First Time Since Iran War Started 

According to the Lloyds house price index, UK house prices grew in June for the first time since the start of the Iran war. Lloyds revealed a 0.2% rise in average UK house prices over the month, following a 0.2% fall the previous month. 

The average house in the UK cost £299,330 in June, showing signs that the uncertainty driven by the conflict is beginning to ease slightly. Annual price growth increased to 0.8% in June, with inflation rates beginning to reduce after the spike in March which was largely caused by high oil prices as a consequence of the war and closing of the strait of Hormuz. 

Base rate stays at 3.75% 

The Bank of England base rate has remained at 3.75% throughout the first half of 2026, helping to maintain mortgage affordability with better deal availability compared to the higher rates from summer 2023 to the end of 2025. 

However, there is still ongoing uncertainty due to events in the Middle East which has led to increased caution in the housing market. The UK inflation rate was 2.8% in April and May 2026, showing a drop from 3.3% in March but fluctuations are expected for the remainder of the year.  

The head of mortgage at Lloyds, Amanda Bryden, shared her views on the current impact of global events and what this could mean for the UK housing market:  

“Looking ahead, we expect the housing market to continue moving at a measured pace. Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor. The outlook for house prices will depend largely on inflation continuing to ease and household confidence gradually improving.”  

The next Bank of England base rate announcement will be on 30 July 2026, and economists are expecting to hold the rate at 3.75%.