UK house prices in October fall at fastest annual pace in three years

UK house prices fell in October, recording their steepest annual decline in three years as elevated borrowing costs and renewed inflationary pressures weighed on demand, figures from Lloyds Bank showed on Friday.

House prices declined by 0.6% month-on-month in October, following a 0.1% fall in September. The average property price dropped to £296,285 from £298,167. The FXStreet-cited consensus was for a 0.1% monthly rise in October.

On an annual basis, prices fell by 1.2%, the largest decline since October 2023. The consensus was for a much smaller annual dip of 0.3%.

Prices were down 0.5% on a quarterly basis.

Andrew Asaam, mortgages director at Lloyds, said: "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."

He added: "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."

Regionally, Northern Ireland recorded the strongest annual house price growth at 4.4%, slowing from 6.9% in September. Scotland saw prices rise by 2.8%, while Wales recorded growth of 1.6%.

In England, the North West led annual gains at 2.2%, followed by the North East at 2.0%. Greater London recorded the sharpest decline, with prices falling 3.1% annually, while the South East and South West both registered declines of 2.4%.

Looking ahead, Asaam said housing market conditions were likely to remain subdued in the near term, but Lloyds did not expect a sustained period of falling prices.

He added that wages rising faster than property prices should gradually improve affordability.

Copyright 2026 Alliance News Ltd. All Rights Reserved.