Lloyds Share Price Forecast as UK House Prices Cool

Summary:

In this Lloyds share price forecast, we explain what to expect now that UK house prices have started cooling down after stamp duty waiver

The Lloyds share price will be in the spotlight today after the relatively weak UK house price index (HPI) data. The stock ended the day at 46.44p, which was about 8% below the year-to-date high. It has risen by more than 35% this year.

Lloyds news. Lloyds Bank is the biggest mortgage lender in the United Kingdom. It provides these services through its eponymous brand and other companies like Halifax and Bank of Scotland. Therefore, the bank has benefited substantially from the recent surge of house prices and demand for mortgages. This demand was mostly because of the overall low-interest rates and the government’s waiver on stamp duty.

However, it seems like the housing market is cooling down. According to Halifax, house prices declined by 0.5% in June, the first monthly decline since the year started. The average price of a house declined to 260,358 pounds. It rose by 2.9% in the second quarter and by 8.8% on a year-on-year basis. The company attributed this to the ongoing phasing out of the stamp duty holiday. Still, house prices are still 21,000 pounds above where they were in the same time a year ago. In a statement, Russel Galley of Halifax said:

“It is important to put such a moderate decrease in context, with average prices still more than £21,000 higher than this time last year, following a broadly unprecedented period of gains.”

The biggest increases in house prices was in Wales led by Northern Ireland and North West. So, what next for the Lloyds share price?

Lloyds share price analysis

The daily chart shows that the LLOY share price has struggled lately after it rose to a YTD high of 50p in June. The stock has weakened as investors have started worrying about the housing sector. It has moved at the same level as the 30-day and 15-day volume-weighted moving average (VWMA).

It also seems to be forming a bullish flag indicator that is usually a bullish signal. Therefore, the stock will likely break out higher in the next few weeks. If this happens, the stock will likely retest the YTD high of 50p. On the flip side, a drop below the support at 45p will invalidate this prediction.