UK house prices fell 0.6% in October, according to the latest Lloyds House Price Index. The decline followed a 0.1% drop in September and took the average property price to £296,285, down from £298,167 a month earlier.
Prices are now 1.2% lower than a year ago, the biggest annual fall since October 2023, while the quarterly change stood at a 0.5% decline.
“UK house prices fell by -0.6% in October, a larger drop than in recent months, taking the average property price down to £296,285,” said Andrew Asaam, mortgages director at Lloyds. “Prices were also -1.2% lower than a year ago, the biggest annual fall since October 2023.
“Housing demand is currently being tested by a challenging economic backdrop. Renewed inflationary pressures, driven in part by the conflict in the Middle East, are keeping borrowing costs high and adding to the squeeze on household finances, making some buyers understandably more cautious.
“However, it’s important to put October’s fall in context. House prices have changed relatively little over the past couple of years, as the market has gradually adjusted to higher interest rates. The recent rise in energy and other household costs has added to the pressure on buyers, so some adjustment in prices is not surprising.
“Looking ahead, conditions are likely to remain subdued in the near term, but we don’t expect this to lead to a sustained period of falling house prices. With wages continuing to rise faster than property prices, the gap between earnings and house prices should gradually narrow, helping affordability to improve over time.”
House prices across nations and regions
Northern Ireland continues to lead UK annual growth at 4.4%, although that pace has slowed considerably from 6.9% last month. The average property there is now worth £228,708. Scotland also posted solid growth, with prices up 2.8% over the past year to an average of £222,667. Growth strengthened slightly in Wales, rising to 1.6%, with the typical property valued at £233,116.
In England, three regions recorded annual growth. The North West saw prices rise 2.2%, taking the average to £249,916, while the North East gained 2.0% to £184,318. The West Midlands was the only other English region in positive territory, up 0.3% to an average of £261,656.
Prices remain under pressure across much of southern England. Greater London recorded the largest annual decline, down 3.1% to £524,892, followed closely by the South East and South West, which both fell 2.4% to £379,258 and £298,057 respectively.
Industry reaction
“With a year that has so far presented significant challenges for consumer affordability, it sadly comes as little surprise that wider concerns within the global economy are now beginning to impact house prices,” comments Nathan Emerson, CEO of Propertymark.
“Although the outlook for housing affordability remains uncertain, the recent Budget has provided prospective first-time buyers across England with greater clarity on the support available to them. The decision to broaden the ‘Your First Home’ scheme is an encouraging development, potentially making homeownership accessible to more people across England and easing some of the financial barriers associated with buying a first property.
“Nevertheless, renewed inflationary concerns and yesterday’s increase in the base rate will continue to weigh on consumer confidence, particularly as households remain mindful of the cost of living. As a result, many buyers may take a more measured approach over the coming months, carefully considering their financial position before committing to a house move.”
