By Salma El-Sakka
UK house prices recorded their biggest annual fall in three years in October, according to Lloyds Banking Group. The average property value dropped 1.2% year-on-year, the steepest decline since October 2023, with the average price standing at £296,285.
Monthly Drop and Market Context
Compared with September, the average price fell by £1,882, a 0.6% monthly decrease. Andrew Asaam, mortgages director at Lloyds, said housing demand is being tested by a challenging economic backdrop, citing renewed inflationary pressures partly driven by the conflict in the Middle East that are keeping borrowing costs high.
Interest Rate Rise Adds Pressure
On Thursday, the Bank of England raised its base rate by 0.25 percentage points to 4%, the first increase in more than three years. UK Finance estimates the rise will add £30.72 on average to monthly payments for homeowners on tracker mortgages.
Fixed-Rate Deals Expiring
Around 87% of outstanding homeowner mortgages are on fixed rates, but some 2.3 million fixed-rate deals are due to expire in 2027, according to UK Finance analysis. Asaam noted that while conditions are likely to remain subdued in the near term, a sustained period of falling house prices is not expected, with wages rising faster than property prices gradually improving affordability.
