UK house prices experienced another drop in October, but this does not indicate a “sustained period of falling housing prices”, according to Lloyds.
The bank’s latest house price index (HPI) showed a -0.6% decline following a -0.1% decrease in September, bringing the average property price down to £296,285 from £298,167.
This is -1.2% lower than the same time last year, the largest annual decline since October 2023.
Andrew Asaam, mortgages director at Lloyds, said subdued growth is partly being driven by the war in the Middle East increasing borrowing costs and squeezing household finances.
“However, it’s important to put October’s fall in context,” he added.
”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 have added to the pressure on buyers, so some adjustment in prices is not surprising.
“Looking ahead, conditions are likely to remain subdued in the near term, but we don’t expect this to lead to a sustained period of falling house prices. With wages continuing to rise faster than property prices, the gap between earnings and house prices should gradually narrow, helping affordability to improve over time.”
Northern Ireland remained the frontrunner for annual house price growth at +4.4%, with the average home costing £222,667. However, this is slower than the previous month’s +6.9%.
Scotland posted a +2.8% increase to £249,916, while the cost of a home in Wales rose +1.6% to £181,318.
In England, the North West, North East and West Midlands recorded annual growth of +2.2%, +2.0% and +0.3% respectively.
This is in contrast to Greater London’s -3.1% decline, and the South East and South West both recording -2.4% drops.
The average house price in Greater London in October was £524,892, while this was £181,318 in the North East.
