By Salma El-Sakka
UK house prices fell 0.6% in October, the steepest monthly decline in more than three years, leaving the average property price at £296,285, according to data from Lloyds Banking Group. The drop marks the fourth consecutive monthly decrease and defied analyst expectations of a 0.1% rise, which would have been the first increase since June.
Annual Decline Deepens
Compared with October last year, prices were down 1.2%, the largest annual fall since October 2023. The figures underscore a housing market under pressure from elevated borrowing costs and a challenging economic backdrop.
Mortgage Rates Remain High
Prospective buyers face average two-year fixed mortgage rates of 5.97% and five-year fixed rates of 5.99%, according to Moneyfacts. The Bank of England raised its base rate to 4% — the first increase in three years — to combat inflation driven higher by Middle East conflict pushing oil above $100 a barrel. UK inflation stood at 3.5% in September.
Industry Voices Warn of Psychological Impact
Andrew Asaam, mortgages director at Lloyds, said renewed inflationary pressures are keeping borrowing costs high and squeezing household finances, making buyers more cautious. Amy Reynolds, head of sales at estate agency Antony Roberts, noted the market has lost momentum, with the latest rate rise reinforcing the perception that borrowing is becoming more expensive. Savills predicts the sluggish market will not recover until 2028, when an expected improvement in the economy and mortgage affordability could support a turnaround.
