Flat UK housing market dragged down by the South
Today’s UK House Price Index figures showed the average UK house price in June 2026 was £272,000, an annual increase of 2%. The monthly data shows average UK house prices rose by only 0.2% on a seasonally adjusted basis between May and June 2026, compared to a 1% rise in the same period last year.
The regional data for June shows significant disparities between the North and South housing markets, with prices increasing by 4.7% in the North of England in the 12 months to June, compared with a 2.5% decrease in London in the same 12-month period. This marks the tenth consecutive month of annual falls in London.
Stacy Eden, National Head of Real Estate at RSM UK said: “Today’s data indicates that house prices have flatlined nationally. However, there are significant disparities between regional markets with prices largely rising in the North, and either declining or not moving in the South.
This is particularly evident in areas such as London, where penal rates of Stamp Duty Land Tax (SDLT) and larger mortgages at ever higher mortgage rates are most keenly felt.
“Average mortgage rates remain around 5%, edging upwards due to increasing gilt rates, driven by concerns about the UK fiscal position and expectations of further inflation. As a result, mortgage approvals remain subdued, with the figure for June at 58,200, below the long-term average of 61,400 and further driving stagnation in the market. With Rightmove reporting a 2% decline in the average house price on its website in August, we could see a decline in average UK house prices in the coming months.
“We urge Andy Burnham to recognise the ever-increasing cost for housebuilders of building a home which, combined with stagnant house prices, is seeing an increasing number of developments become unviable. Currently, the government is on track to build 837,5000 homes by 2029, which falls well short of the 1.5m target it set. This is driven by very little development of housing in London due to the viability concerns. And with the Building Safety Levy (BSL), coming into force on 1 October 2026, estimated to add over £2,000 to the cost of developing a flat, there are concerns that viability challenges will only intensify. Many developers are calling for this to be scrapped.
“We’d like to see Andy Burnham’s government take a more long-term and holistic approach to planning policy and real estate taxation, which would enable the sector to thrive and improve the viability of developments. A reform of SDLT to reduce penal rates at the top end could provide a much-needed boost to the most-struggling regional markets. However, there is a risk that other additional taxes or regulation, such as a penal land tax or the BSL, will become another cost for developers to consider, exacerbating the challenge of development viability.”