House prices fell by 0.6% in October, taking the average property price to £296,285, according to the latest Lloyds House Price Index. Recent rising inflation figures and household cost pressures are affecting potential buyers.
October’s fall followed a 0.1% decrease in September. Prices were 1.2% lower than a year earlier, marking the biggest annual fall since October 2023.
Andrew Asaam, Mortgages Director at Lloyds, says: ‘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 squeezing 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,’ adds Asaam. ‘The recent rise in energy and other household costs has added to the pressure on buyers, so some adjustment in prices is not surprising.
That said, house prices have changed relatively little over the past couple of years as the market has adjusted to higher interest rates. Lloyds expects conditions to remain subdued in the near term but doesn’t anticipate a sustained period of falling prices. It also notes that wages are continuing to rise faster than property prices, which could gradually improve affordability.
Regional house price differences
Northern Ireland recorded the strongest annual growth, with prices up 4.4% to an average of £228,708, although growth slowed from 6.9% the previous month. Scotland rose 2.8%, and Wales rose 1.6%.
In England, prices increased in the North West and North East by 2.2% and 2%, respectively. Greater London saw the largest annual fall, down 3.1%. Prices were also 2.4% lower in both the South East and South West.
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