Emeritus Professor Joe Nellis is economic adviser at MHA, the accountancy and advisory firm.

The housing market has entered a holding phase.

The long-term trajectory of interest rates remains unclear, leading many potential buyers to hold off on purchasing until the economic outlook becomes clearer. Prices are yet to pick up at any great rate this year, with the Halifax House Price recording only a 0.6% year-on-year rise in June. A monthly rise of 0.2% reflects a market that is stable but lacking any real momentum.

Affordability remains a significant constraint on the market. Although mortgage rates have eased slightly in recent months as lenders compete for business, they remain high enough to keep many potential buyers on the sidelines. First-time buyers, in particular, continue to struggle to save for larger deposits. As a result, demand remains steady rather than strong, helping to keep house price growth modest.

Although lenders have introduced more flexible affordability assessments and expanded the availability of higher loan-to-value mortgages, many prospective buyers are still forced to postpone home ownership. Given the economy's current lacklustre state, any improvement in affordability will be gradual rather than dramatic.

Significant regional differences remain. House prices continue to rise more quickly in most northern regions of the UK than in London and the South East, where higher property values and borrowing costs have made it increasingly difficult for buyers to enter the market. By contrast, relatively lower prices and better value for money in northern regions are supporting demand, despite the wider pressures facing the housing market.

The housing market is likely to strengthen only modestly in the second half of 2026, with transaction volumes picking up more quickly than prices as competition among mortgage lenders supports demand. Over the year as a whole, prices are expected to post low single-digit growth. Much depends on the direction of the UK economy – and more specifically, monetary policy. What is clear is that there is no sign of a house price boom on the horizon!