UK HOUSE PRICES RECORD FIRST ANNUAL FALL SINCE 2023

UK house prices fell year-on-year for the first time since November 2023, according to figures from Lloyds. The average property price stood at £298,468 in August, representing a 0.4 per cent decline compared with August 2025. Prices remain marginally up since the start of 2026, though the annual downward movement marks a significant shift in the housing market's trajectory. The last comparable period of year-on-year falls occurred following a spike in mortgage rates in summer 2023 driven by inflation concerns.

Mortgage rates have climbed this year following the start of the conflict in the Middle East, with average two-year and five-year fixed rate deals now around 5.6 per cent, up from approximately 4.9 per cent at the conflict's onset. Regional variations are pronounced, with London recording a 1.5 per cent annual price fall to £534,177 and the South East experiencing a 1.6 per cent decline to £381,729. Housing market activity has slowed markedly, with mortgage approvals at their lowest level since the start of 2024 according to the Bank of England, and residential transactions in the three months to July running four per cent lower than the preceding quarter. Andrew Asaam, mortgages director at Lloyds, noted that sellers remain reluctant to cut asking prices substantially, with some buyers opting to delay purchases amid economic uncertainty.

Asaam stated that the housing market is expected to "remain subdued" in coming months as buyers await the October Budget. He added that house prices are unlikely to fall significantly further, given growing wages and resilient employment levels supporting demand from those needing or wanting to move. The divergence in performance across UK regions reflects how higher property valuations in southern England expose buyers and sellers to greater costs including stamp duty.