Price drop biggest since October 2023 – Lloyds HPI
House prices have seen their biggest annual fall since October 2023, according to the latest Lloyds House Price Index.
The index showed that prices fell -0.6% in October and -1.2% year-on-year, with the average property price now £296,285, down from £298,167 in September when prices fell -0.1%.
Regionally, Northern Ireland continues to lead the UK, although the rate of growth has slowed from +6.9% the previous month to +4.4%, while Scotland is up +2.8% over the past year and Wales up +1.6%.
The North West (+2.2%), the North East (+2.0%) and the West Midlands (+0.3%) were the only three regions in England to see growth.
In the south, Greater London recorded the largest annual decline, down -3.1% year-on-year, followed by the South East and South West, both down -2.4%.
South ‘in sharp correction territory’
Jonathan Hopper, CEO of Garrington Property Finders, said the impact of prices in the south was the most damaging to the market as a whole. He said: “Southern England is in sharp correction territory now. Prices there are sliding so far, and so fast, that they’ve dragged the national average into the red too.
“Two factors have combined to push down prices in London and the South. The first is the cost of borrowing. Meanwhile, buyers’ willingness to move now is being hampered by the sense that if they wait a few months, they may be able to buy a better home for less.”
However, he warned this was a risky strategy. “Buyers who hold off and wait for prices to fall further may find they don’t hold all the cards. The Bank of England dropped heavy hints that interest rates could rise further in coming months. If mortgages become more expensive, a lower purchase price may not translate into a lower monthly payment, and some of the negotiating power available today could be lost.”
Experts said October’s fall should be put into context, however. Andrew Asaam, mortgages director at Lloyds, said: “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.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, agreed: “Activity and prices have probably held up better than we might have anticipated, partly because house prices are still being outpaced by wage growth.”
And this bodes well for the future, said Assam. “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.”
