UK house prices fell 0.6% in October, the steepest monthly drop in more than three years and the fourth decline in a row. Lloyds data shows high mortgage rates weighing on the market, a day after the Bank of England raised its base rate to 4%.
UK house prices fell at the steepest rate in more than three years in October, marking the fourth consecutive monthly decline. The lender Lloyds put the average price of a typical UK property at £296,285.
Prices miss forecasts of a small rise
The 0.6% monthly fall was the steepest since Lloyds recorded a 1.6% drop in August 2023. Analysts had expected a small monthly rise of 0.1%, which would have been the first increase since June.
Compared with the same month last year, prices were down 1.2%, the biggest annual fall since October 2023.
Borrowing costs squeeze buyers
Prospective buyers face a two-year fixed mortgage averaging 5.97% and a five-year fixed rate averaging 5.99%, according to Moneyfacts.
The figures came a day after the Bank of England's monetary policy committee raised the base rate by a quarter of a point to 4%, its first increase in three years. The central bank acted to fight inflation pressure caused by the Iran war, and the conflict has pushed oil above $100 a barrel in recent months, lifting inflation to 3.5% in September.
Andrew Asaam, mortgages director at Lloyds, said: "Housing demand is currently being tested by a challenging economic backdrop"
Recovery not expected until 2028
Amy Reynolds, head of sales at the Richmond estate agency Antony Roberts, said buyers are still out there but are being careful. She said those remortgaging and second-steppers trying to stretch to one more bedroom are hit hardest.
Savills said this week that the housing market is not expected to recover until 2028, when a forecast improvement in the economy and mortgage affordability should support a recovery.
Source: The Guardian
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