House prices fall 0.6% in October, steepest drop in three years
The average UK home cost £296,285 in October, down 0.6% on September and 1.2% on a year earlier, according to Lloyds, whose index recorded its fourth monthly fall in a row and the sharpest since August 2023. Economists had pencilled in a 0.1% rise. The lender’s mortgages director, Andrew Asaam, said renewed inflation “driven in part by the conflict in the Middle East” was “keeping borrowing costs high and adding to the squeeze on household finances”.
The figures landed a day after the Bank of England raised Bank Rate to 4%, its first increase in three years, and they show the strain already in the system before that move: the average two-year fixed mortgage is 5.97% and the five-year 5.99%, mortgage approvals fell to 53,443 in September, the fewest since December 2023, and Rightmove on Friday cut its growth guidance after buyer demand dropped 10% and agreed sales 9%. The pain is southern. Greater London prices are 3.1% lower than a year ago at £524,892, with the south-east and south-west both down 2.4%, while Northern Ireland, Scotland and Wales are still rising. Mr Asaam argued against alarm: “House prices have changed relatively little over the past couple of years,” and with wages outpacing property “the gap between earnings and house prices should gradually narrow”. Nine in ten outstanding mortgages are fixed, which cushions the rate rise for now, but 2.3 million fixed deals expire in 2027. Savills expects no recovery before 2028. The annual decline is the biggest since October 2023; whether it deepens depends on how many more rises the Bank signals, with markets watching Thursday’s warning that inflation could near 5% by spring.