UK house prices fall sharply in October

6th Nov 2026 07:12

(Sharecast News) - UK house prices slid in October, industry data showed on Friday, as the challenging economic backdrop hit home.

The Lloyds house price index fell 0.6% last month, building on September's 0.1% dip. On an annual basis, house prices are now 1.2% lower - the biggest decline since October 2023. Both falls were considerably steeper than expected.

The average price of a property in the UK now stands at £296,285.

The housing market has been buffeted by a number of headwinds this year, including mounting inflationary pressures following the outbreak of war in the Middle East, weakened consumer sentiment and affordability constraints. On Thursday, the Bank of England - which had left the cost of borrowing at a historically high 3.75% for several months - raised Bank Rate for the first time in more than three years, to 4%, as it moved to contain rising inflation. The consumer price index now stands at 3.5%, and is slated to continuing to ticking higher into 2027.

Andrew Asaam, mortgage director at Lloyds, said: "Housing demand is currently being tested by a challenging economic backdrop. Renewed inflationary pressures, driven in part by the conflict in the Middle East, are keeping borrowing costs high and adding to the squeeze on household finances, making some buyers understandably more cautious."

However, he argued it was important to put October's decline into context. "House prices have changed relatively little over the past couple of years, as the market gradually adjusted to higher interest rates."

Looking ahead, and Lloyds expects conditions to remain subdued in the near term. But Asaam added: "We don't expect this to lead to a sustained period of falling house prices. With wages continuing to grow faster than property prices, the gap between earnings and house prices should gradually narrow, helping affordability to improve over time."

The long-running index changed its name to Lloyds HPI from Halifax HPI in July, after parent Lloyds Banking Group dropped the Halifax brand.