UK house prices fall for first time in nearly three years, Lloyds reports
Lloyds bank says UK house prices dropped 0.4% year-on-year in August, the first annual decline since November 2023, driven by higher mortgage rates and geopolitical uncertainty.
UK house prices fell year-on-year in August for the first time in almost three years, according to lender Lloyds, as buyers faced higher borrowing costs and broader economic uncertainty. The 0.4% annual decline missed economists' expectations of a 0.2% rise, based on a Reuters poll.
The average home cost £298,468 in August, down 0.2%, or £685, from July, Lloyds' monthly index showed.
Lloyds director Andrew Asaam described the market as subdued amid elevated inflation, borrowing costs and geopolitical tension. He noted there was no rush among homeowners to slash prices; instead, many sellers are holding firm, unwilling to accept what they view as low offers, while some buyers are waiting to see how conditions evolve. He added the market is expected to stay fairly subdued in coming months, though this is likely to have only a limited effect on prices overall.
Tensions in the Middle East have fuelled inflation concerns this year, raising expectations of further interest rate increases. Mortgage borrowers have faced months of volatility, with the average two-year fixed residential rate at 5.6% on Friday and the five-year rate at 5.66%, according to Moneyfacts — both up from below 5% at the start of the year. Mortgage approvals fell to their lowest level since early 2024, Lloyds said.
An estate agent in north London, Jeremy Leaf, said the slowdown reflects a standoff between cautious buyers and sellers who feel they have already cut prices as much as they can, though he noted activity has picked up now that the summer holiday period has ended.
Across the UK, Northern Ireland remained the strongest performer, with prices up 6.9% year-on-year to an average of £231,245. Scotland rose 3.5% to £223,437, and Wales grew 0.6% to £230,282. Within England, the north-east and north-west saw growth of 2.7% and 2% respectively, while the south-east recorded the UK's steepest decline, down 1.6% to £381,729. In greater London, prices fell 1.5% to £534,177.
RBC Capital Markets analyst Anthony Codling said the figures reflect a market under pressure from multiple directions — elevated mortgage rates, geopolitical uncertainty pushing up energy costs, and stretched, cautious consumers — with sellers holding steady rather than cutting prices while buyers wait for clarity on interest rates.
