Key facts
- UK house prices fell 0.4% year-on-year in August, the first decline since November 2023.
- London house prices dropped 1.5% to an average of £534,177 in August.
- The south-east of England saw the biggest drop in house prices, down 1.6%.
- Northern Ireland recorded the strongest house price growth, up 6.9% year-on-year.
- The average UK property cost £298,468 in August, down 0.2% from July.
- Average two-year fixed mortgage rates were 5.63% and five-year deals were 5.68% in August.
UK house prices have fallen for the first time in almost three years, with London experiencing the sharpest decline. The drop of 0.4% year-on-year in August marks the first decrease since November 2023, according to Lloyds lender data. This contrasts with economists' expectations of a 0.2% annual rise.
The average property cost £298,468 in August, a 0.2% decrease from July. Lloyds director Andrew Asaam described the market as "subdued" due to higher inflation, borrowing costs, and geopolitical tensions. He noted that many homeowners are choosing to wait rather than accept lower offers, while some buyers are holding back.
Mortgage rates have remained elevated, with average two-year fixed residential mortgages at 5.63% and five-year deals at 5.68% in August, both significantly higher than at the start of the year. Mortgage approvals were at their lowest level since early 2024.
Estate agent Jeremy Leaf observed a "standoff" between cautious buyers and sellers unwilling to lower prices further. However, he noted an increase in activity as the holiday season concluded, potentially boosting confidence.
Geographically, Northern Ireland led in price growth with a 6.9% annual increase, followed by Scotland (3.5%) and Wales (0.6%). In England, the north-east and north-west saw modest growth, while the south-east experienced the largest drop in prices across the UK, down 1.6%. Greater London saw prices fall by 1.5% to an average of £534,177.
An RBC Capital Markets analyst, Anthony Codling, stated that the market is under pressure from multiple factors including mortgage rates, geopolitical uncertainty impacting energy prices, and a cautious consumer.