UK house prices fell 0.6% month on month in October, the fourth consecutive monthly decline and the steepest monthly fall since August 2023, according to Lloyds. The average price of a typical property stood at £296,285. Prices were down 1.2% on a year earlier, the biggest annual fall since October 2023.
Mortgage costs weigh on demand
Andrew Asaam, mortgages director at Lloyds, said housing demand was being tested by a difficult economic backdrop. Renewed inflationary pressure, driven in part by the conflict in the Middle East, was keeping borrowing costs high. That added to the strain on household finances.
Average two-year fixed mortgage rates stood at 5.97%, while five-year fixed rates averaged 5.99%. Lloyds’ monthly drop was far larger than the 0.1% rise analysts had expected.
Rate rise lands on a cooling market
The Bank of England raised its base rate by a quarter point to 4% the day before the Lloyds figures, its first increase in three years.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said the market had lost momentum as the year drew to a close. Buyers were still active, she said, but were being cautious.
Recovery seen later
Savills said the UK housing market was not expected to recover until 2028.
Related: UK house prices rise 0.5% in October, slowest in two years · Turkey's consumer prices rise 2.58% in October, annual inflation 29.77%
Source: Bank of England · Lloyds
