UK house prices fell at their fastest annual pace in three years in October, according to data from mortgage lender Lloyds published on Friday, 6 November. Prices dropped 0.6% on the month to an average of £296,285, down from £298,167 in September, and were 1.2% lower than a year earlier — the biggest annual fall since October 2023, Reuters reported.

The monthly fall was larger than economists had expected, and it was the fourth consecutive monthly decline. Lloyds said prices have changed relatively little over the past two years as the market adjusted to higher borrowing costs, and it does not expect a sustained period of falling prices, pointing to wage growth running ahead of price growth.

London falls fastest as regions diverge

The picture varied sharply across the UK. Northern Ireland recorded the strongest annual growth at 4.4%, followed by Scotland at 2.8% and Wales at 1.6%, according to Alliance News. In England, the North West led gains at 2.2%, while Greater London recorded the sharpest decline, down 3.1% on the year. Quarterly prices across the UK were down 0.5%.

The figures landed a day after the Bank of England raised its base rate by a quarter point to 4%, its first increase since August 2023, on an 8-1 vote. Lloyds mortgages director Andrew Asaam said elevated borrowing costs and renewed inflationary pressures linked partly to the Middle East conflict were weighing on housing demand and household finances.

The Lloyds figures contrasted with data from Nationwide published last week, which showed house prices stagnating in October, with annual inflation of 0.5%. The Lloyds index, formerly the Halifax House Price Index, is the UK's longest-running monthly house price series, dating back to January 1983.

Sources: Reuters, via Duke FM; Alliance News, via Morningstar.